Stay informed with free updates
Simply sign up to the Automobiles myFT Digest — delivered directly to your inbox.
The number of vehicles built in Britain last year fell to the lowest level since the early 1,950s as the industry’s trade body said car manufacturers were looking to diversify into the defence sector.
In 2025, 764,715 cars and vans were produced — 15.5 per cent lower than the year before and the worst year since 1952 — according to figures released by the Society of Motor Manufacturers and Traders on Thursday.
The sharp drop in production was caused by a fall-off in exports, in part caused by US tariff turmoil, and a devastating cyber attack that shut down production at Jaguar Land Rover for more than a month. Production of commercial vehicles plunged 62 per cent after Stellantis shut down its van factory in Luton.
Mike Hawes, chief executive of SMMT, said that as a result “a lot of suppliers are looking at what other sectors can we supply into”.
Following promises by Sir Keir Starmer’s government to increase defence spending, Hawes added that the SMMT was encouraging suppliers to diversify into defence industries.
Asked whether car suppliers would be able to build drones, Hawes did not provide details but added: “Basically they’ve got a skill set and they’ve got a capability. The question is can you apply that to a defence industry which wants to be, where possible, sourcing from the UK.”
In Europe, car suppliers already have converted some of their underutilised production lines for defence purposes amid a surge in military spending across the continent. Renault recently reached a deal with the French defence company Turgis Gaillard to make military drones.
Exports to Europe, the largest destination for vehicles manufactured in the UK, were down 3.3 per cent in 2025 against the year before, while those to the US and China were down 18 per cent and 12.5 per cent respectively.
In recent years, vehicle production in the UK has been hit by manufacturers such as Stellantis, Honda and Ford closing plants.
In Britain in 2025, 717,371 cars were built, the lowest since 1956. The previous low since 1956 was recorded in 2022, when Covid caused supply-chain disruptions that hit production.
The UK is aiming to produce 1.3mn vehicles a year by 2035. Hawes said that while there was “a pathway” towards 1mn vehicles being produced a year by 2027, with the planned launches of new products by Nissan and JLR, the 1.3mn target would be unlikely to be achieved without a new UK plant, probably by a Chinese carmaker.
The UK’s automotive industry is likely to come under further pressure as Brussels prepares a “made in Europe” policy that involves setting minimum quotas for strategic products, including cars, to be made in the EU, in an attempt to cut the bloc’s reliance on China and protect local production against cheap imports.
Officials have discussed setting a minimum quota of 70 per cent of cars to be built in Europe, but manufacturers remain divided about its scope, with some calling for other hubs such as Turkey and the UK to be included.
“This is a significant threat to the industry,” Hawes said. “Unless the UK is seen as part of [the EU], these proposals could have the effect of delivering what Brexit didn’t deliver, and that could make it much harder for UK-produced vehicles to access the European market.”