In brief
The Society of Motor Manufacturers and Traders says EU trade measures threaten a 2026 decline in UK vehicle output before a 2027 recovery to 752,000 units, mainly from electric cars. Proposed EU rules could bar UK cars from “Made in EU” labeling and impose £1.4 billion in tariffs on two‑way EV trade. The SMMT calls the forthcoming EU‑UK summit vital to protect the €80 billion trade link and safeguard industry competitiveness.
The Society of Motor Manufacturers and Traders (SMMT) warned on Thursday that European Union trade measures could hinder Britain’s expected vehicle production recovery next year, saying the upcoming EU‑UK summit is a crucial moment to secure solutions.
The SMMT’s outlook projects an annual decline in vehicle production in 2026, but sees a rise to 752,000 units in 2027 as new electric models enter the market. The forecast relies largely on the UK’s biggest export market, the EU, which accounted for 57.5 percent of British vehicle exports in September.
Three main threats were identified. First, the European Commission’s “Made in EU” proposals in their current form could effectively exclude vehicles built in the UK from EU markets. The SMMT stressed that such exclusions would damage manufacturers on both sides of the Channel.
Second, tougher rules of origin set to take effect in 2027 under the Trade Cooperation Agreement could result in tariffs totalling £1.4 billion—about $1.9 billion—annually on two‑way electric‑vehicle trade. This would increase the cost of exporting UK‑built EVs to the EU and importing EU components.
Third, the SMMT warned that unrealistic domestic electric‑vehicle sales targets are pressuring manufacturers, eroding profitability and discouraging investment in the UK as a production hub.
Exports make up more than three‑quarters of UK vehicle production, making a smooth trading relationship with the EU vital. The SMMT said the measures would damage the automotive industry on both sides and that the EU‑UK Summit provides a “vital opportunity to agree pragmatic solutions and safeguard an €80‑billion (about $90 billion) trading relationship.”
Overall, the society called for negotiations that preserve UK-built vehicles’ access to EU markets and mitigate the tariff impact, arguing that such measures are essential for the long‑term competitiveness of the UK automotive sector.
