Car production in the UK hits 40-year low due to reduced demand faced by automakers

British car production has plunged to its lowest level in more than 40 years as automakers struggle to deal with falling demand.

Ministers are facing mounting pressure to ease electric vehicle targets due to concerns raised by the industry about potential factory closures and job losses.

Around 64,216 new cars rolled off UK production lines last month, down 30 per cent from last year, according to industry body the Society of Motor Manufacturers and Traders (SMMT). 

It was the worst monthly performance for the industry since 1980 when Britain was gripped by industrial unrest and soaring inflation.

The SMMT highlighted that all major automakers in the UK have seen production decline, with output of electric vehicles falling nearly 46 per cent.

So far this year, car production is down nearly 13 per cent on 2023 at 734,562 vehicles.‘

‘These figures offer little Christmas cheer for the sector. While a decline was to be expected given the extensive changes underway at many plants, manufacturing is under pressure at home and abroad,’ said SMMT head Mike Hawes.

Around 64,216 new cars rolled off UK production lines last month, down 30 per cent from last year (file image)

So far this year, car production is down nearly 13 per cent on 2023 at 734,562 vehicles (file image)

Vauxhall parent firm Stellantis says it will close its Luton van factory (pictured) next year to consolidate production at its Ellesmere Port plant

He added: ‘Government can help by supporting consumers in the transition, fast tracking its Industrial Strategy for advanced manufacturing and, most urgently, reviewing the market regulation which is putting enormous strain on the sector.’

The bleak data comes as British carmakers have raised the alarm about the state of the industry. 

Last month, car giant Stellantis announced plans to shut down its van-making factory in Luton putting 1,100 jobs at risk.

US group Ford has also said it plans to cut 800 jobs in the UK over the next three years. It currently employs 5,300 people in Britain.

The closures and cuts come amid an intensifying row between the industry and ministers over targets intended to boost the number of electric cars on the roads.

Electric cars must make up at least 22 per cent of sales for car makers this year, a figure that will rise to 80 per cent by 2030. 

Firms that fall short face hefty fines.Labour has also pledged to reintroduce a ban on new petrol and diesel cars by 2030 after the Conservative government previously pushed back the deadline to 2035.

Electric cars must make up at least 22 per cent of sales for car makers this year, a figure that will rise to 80 per cent by 2030 (file image)

Business Secretary Jonathan Reynolds admitted to MPs last month that the electric vehicle mandate was ‘not working as anyone intended’.

Research by This is Money suggests some of the biggest car firms and groups are falling behind on targets for battery electric vehicle sales

But car makers have urged the Government to rethink the targets, warning that falling demand for electric vehicles from consumers means they are being forced to close factories and cut jobs instead.

The Government’s stance appears to have softened when Business Secretary Jonathan Reynolds admitted to MPs last month that the electric vehicle mandate was ‘not working as anyone intended’.

Carmakers are also facing difficulties abroad. German giant Volkswagen is currently engaged in talks with the country’s powerful trade unions after around 100,000 of its workers walked on strike in protest at its plans to close factories and cut wages.

Meanwhile, Japanese groups Honda and Nissan have started discussions around a potential merger to try and combat growing competition from larger rivals.

Industry watchers have said all major car brands are suffering from a poisonous cocktail of sluggish demand for electric cars and rising competition from China.

Chinese car makers, on the back of substantial subsidies from Beijing, have begun to dominate their domestic market and are now looking to break into other countries, adding more competition to the sector.