UK Car Manufacturers Face ‘Growing Pains’ Amid Zero-Emission Transition as Production Slows in 2024

Nissan employees make final checks to cars on the production line at Nissan's plant in Sunderland, north east England on July 1, 2021. Oli Scarff/AFP via Getty Images

UK car manufacturers experience “growing pains” in the zero emission vehicle (ZEV) transition, as production volumes dropped over 2024.

The sector produced less than 1 million cars and commercial vehicles last year, the latest figures by the Society of Motor Manufacturers & Traders (SMMT) show.

Factories have turned out 779,584 cars and 125,649 commercial vehicles (CVs), which includes vans, trucks, taxis, buses and coaches. A total of 905,233 units represents a 11.8 percent decrease on 2023.

The drop in production volumes comes as no surprise, according to SMMT Chief Executive Mike Hawes.

He cited geopolitical and trade tensions, as well as pressures around ZEV transition, among the reasons affecting the industry.

“UK manufacturers are set on turning billions of pounds of investment into production reality, transforming factories to make new electric vehicles for sale around the world. Growing pains are inevitable, so the drop in volumes last year is not surprising,” he said.

Under ZEV transition plans, new petrol or diesel cars will be phased out by 2030, and all new cars and vans will need to be 100 percent zero emission by 2035.

Transport Secretary Heidi Alexander said the policy will “restore clarity for manufacturers” and boost consumer confidence in the switch to EVs.

For now, however, challenges in moving to EV production remain, as car factories are being retooled and their wholesale transformation is ongoing.

Volumes of battery electric, plug-in hybrid and hybrid vehicles fell down by 20.4 percent, compared to 2023. The output, however, still accounted for more than 35 percent of the overall total.

Financial Constraints

In January, the SMMT reported a lag in the adoption of EVs by private consumers, despite manufacturer discounts.

Hawes previously said that in 2024, manufacturers spent in excess of £4 billion in discounting.

Higher taxes on businesses, driven by the rise in National Insurance contributions, add extra pressure on the sector, particularly on the automotive supply chain, which is predominantly small and medium-size companies.

The SMMT has called for changes in the next year’s spending review to alleviate the strain on these firms.

While the decline in EV output growth is expected to be temporary, the outcome depends on government investments to drive the transition, such as the announced £2.3 billion funding backing UK manufacturers and consumers.

“Securing this future, however, requires industrial and trade strategies that deliver the competitive conditions essential for growth amidst an increasingly protectionist global environment,” said Hawes.

UK Plants 

Over the year, car production for the domestic market dropped by 8 percent, while exports declines by 15.5 percent.

Output by Nissan, based in Sunderland, fell by 13.2 percent, while the Toyota manufacturing plant in Burnaston saw the output drop by 19.8 percent.

The largest fall of 40.1 percent was recorded at the BMW Group Plant in Oxford.

The figures follow the announcement by Vauxhall and Citroen owner Stellantis of its Luton factory closure, which puts more than 1,100 jobs at risk.

Other cuts include 800 jobs across the UK over the next three years, after Ford announced restructuring plans in November.

The manufacturer said it suffered significant losses in recent years amid pressure from “highly disruptive” shift to electric cars and new competition.

Competition From China

Exports of UK cars to the EU and China were down last year, by 24.3 and 21.8 percent respectively.

In contrast to EU market, Britain remains tariff free to Chinese manufacturers, which could drive growth in their market share.

Research by Auto Trader found that Chinese EV brands are winning over younger UK consumers.

Brands like BYD, GWM and Omoda gain popularity in Britain, with four in ten consumers willing to consider a Chinese car brand.

“Chinese brands are increasingly pivotal players in the UK’s electric transition. Their ability to offer affordable, high-quality electric vehicles, is winning over the younger drivers who will play a vital role in driving the widespread adoption of electric vehicles,” said Auto Trader spokesperson Ian Plummer.

By 2030, when the UK’s ban on the sale of new petrol and diesel cars comes into force, the market could be dominated by Chinese brands, accounting for up to 25 percent, research suggests.

Data from older consumers showed that many remain concerned about data security, quality and pricing when buying Chinese products.

“Consumers’ trust in the quality and safety of these new entrants remains mixed, particularly among older buyers. To succeed, Chinese brands will need to focus on reassuring consumers through strong safety ratings, data security, expert reviews, and customer service that they are as good as the more trusted traditional manufacturers,” said Plummer.

Looking ahead, the SMMT estimates that UK car and light van production to increase in next five year, reaching above 1.1. million units by 2030.