European Union trade measures threaten a projected recovery in British vehicle production next year, the Society of Motor Manufacturers and Traders (SMMT) warned on Thursday, even as new models, mostly electric vehicles, are expected to lift output in 2027.
An independent industry outlook forecasts that annual vehicle production will decline this year before rising to 752,000 units in 2027 as new models enter production, the SMMT said. Full-year output of light vehicles is expected to fall 2.3% to 731,000 units in 2026 amid ongoing model changeovers, after UK factories built 564,537 cars and commercial vehicles in the first nine months of the year, down 3.0% year on year.
September rebound — with a caveat
UK vehicle production rose 36.3% to 74,031 units in September, the strongest growth since August 2022, according to SMMT figures reported by Reuters. The rebound was flattered by comparison with a year earlier, when output was disrupted by a cyber incident. SMMT chief executive Mike Hawes said September’s rebound was welcome, but that the comparison with last year’s disruption masked the pressures on UK manufacturing.
Exports accounted for more than three-quarters of British vehicle production in September, with the EU receiving 57.5% of those exports, SMMT data showed.
The three threats
The SMMT identified three major threats to the industry’s competitiveness, including two related to Britain’s trading relationship with the EU.
First, the European Commission’s “Made in EU” proposals could, in their current form, effectively exclude British-built vehicles from the EU, their largest export market, the SMMT said.
Second, tougher rules of origin taking effect in 2027 under the Trade and Cooperation Agreement could result in tariffs totalling £1.4 billion a year on two-way electric vehicle trade, shared between both sides.
Third, the SMMT warned that Britain’s zero-emission vehicle mandate is adding pressure on manufacturers, with Hawes saying mandate targets are running ahead of demand and draining resources required for British factories and jobs. The industry body called for an urgent conclusion to the ZEV mandate review.
Why it matters
The SMMT said both EU measures would damage the automotive industry on both sides of the Channel, and called the forthcoming EU-UK summit a vital opportunity to agree pragmatic solutions and safeguard an €80 billion trading relationship. The warning matters beyond the car industry because vehicle manufacturing is an export-led sector: with more than three-quarters of production exported and the EU taking well over half of exports, a tariff or market-access shock would fall directly on UK factories and jobs.
What happens next
The SMMT is pressing for pragmatic solutions at the forthcoming EU-UK summit and for an urgent conclusion to the ZEV mandate review. The 2027 forecast depends on new models entering production as planned — and on whether the rules-of-origin and “Made in EU” risks are eased before they bite.
FAQ
How many vehicles will the UK produce in 2027? An independent outlook cited by SMMT forecasts 752,000 units, up from 731,000 expected in 2026.
What is the £1.4 billion tariff risk? Tougher 2027 rules of origin under the Trade and Cooperation Agreement could impose a shared annual £1.4 billion tariff bill on two-way EV trade, according to SMMT.
What are the ‘Made in EU’ proposals? European Commission proposals that SMMT says would, as drafted, effectively exclude UK-built vehicles from their largest export market.
Sources: CGTN (Xinhua/SMMT), “EU trade measures threaten UK auto recovery: SMMT”, https://news.cgtn.com/news/2026-10-30/EU-trade-measures-threaten-UK-auto-recovery-SMMT-1REETPWYXde/p.html; Reuters via Europe Says, “UK vehicle production rises sharply in September against cyber-hit comparison”, https://www.europesays.com/britain/153908/; SMMT release via Thames Gazette, “Vehicle Production Rises but Regulatory and Competitive Pressures Threaten Recovery”, https://thamesgazette.com/business/vehicle-production-rises-but-regulatory-and-competitive-pressures-threaten-recovery/
