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Vehicle Manufacturing Growth In March 2025 Shows Positive Trends Despite First Quarter Decline
UK vehicle production saw a 17.1% increase in March 2025 compared to the previous year, as reported by the Society of Motor Manufacturers and Traders (SMMT). This rise, totalling 79,018 units, was attributed to a weak March last year due to Easter timing and model changes. Car manufacturing grew for the first time in a year, driven by strong export demand, which rose by 30.6%, with 73.3% of output going overseas.
Electrified vehicle production surged by 38.5%, reaching 31,661 units and accounting for nearly half of all UK car output at 45.0%. The proposed revisions to the ZEV Mandate have been positively received by manufacturers, acknowledging challenges like insufficient consumer demand for EVs that affect competitiveness. The UK is a key producer of zero-emission commercial vehicles, especially for domestic markets.
The EU remained the largest destination for UK car exports, making up 57.2% of shipments. The US followed with 15.0%, then China at 8.5%, Turkey at 2.7%, and Japan at 2.6%. Exports increased across all top five markets: EU by 28.9%, US by 36.1%, China by 86.0%, Turkey by an impressive 272.1%, and Japan by 91.8%.
Commercial vehicle (CV) production also rose by 8.2% to reach 8,700 units in March compared to last year's low figures influenced by Easter timing and reduced post-Covid demand in 2023. Domestic demand drove this growth with a significant increase of 77.9% to 5,218 units, while exports fell sharply by -31.8%, comprising just 40% of output.
Overall UK car production for Q1 decreased slightly by -3.2%, despite exports rising by 4.4%. CV output faced a larger decline of -27.1%, with exports dropping significantly by -50.3%. As new US tariffs loom, manufacturers face uncertainty heading into Q2 as US demand may weaken, impacting other markets and supply chains.
The industry anticipates a comprehensive industrial strategy before summer focusing on automotive and advanced manufacturing growth in Britain’s export economy. Trade discussions must progress swiftly to secure jobs and growth on both sides of the Atlantic amid protectionism concerns.
Industry Outlook
SMMT Chief Executive Mike Hawes commented on the March manufacturing increase as overdue good news but noted it was partly due to last year's weaker month caused by holiday timings and product changeovers reducing output: "With the last quarter showing demand for British-built cars rising overseas, navigating the new era of trade uncertainty is now the major challenge."
An independent outlook predicts light vehicle production will decrease by -7.8% in 2025 to reach 818,200 units but may rise slightly by 1.2% in 2026 to hit approximately 827,700 units if government strategies are favourable.
The UK automotive industry plays a crucial role in the economy with £93 billion turnover and £22 billion value added annually while employing around 198,000 people directly in manufacturing roles outside London and South-East regions where wages are about 13% higher than average.
The sector contributes significantly to UK exports with more than £115 billion generated from automotive imports/exports globally across over140 countries importing UK-produced vehicles supported through vibrant aftermarket/remanufacturing industries alongside skilled engineers working within component providers numbering over2500 throughout various sectors including advertising/logistics/steel among others ensuring continued growth potential moving forward into future developments ahead.
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