Andy Burnham is on the clock to save the UK car industry; British car production fell by almost eight per cent in the first half of 2026, with output less than half of what it was a decade ago. Now a new EU law, set to come into force at the end of 2026, as well as ongoing complaints surrounding the UK’s own EV legislation, could be the final nails in the coffin.
As such, the new PM has a job on his hands to get laws rewritten fast in order to avoid manufacturers shifting production outside of the UK – something that would not only come at the expense of jobs and the economy, but push up showroom prices, too.
Brexit laws could worsen car manufacturing slump
In the first half of this year, just under 372,000 cars were manufactured in the UK, compared to 386,000 in 2025 and almost 900,000 in 2016. These figures, released by the Society of Motor Manufacturers and Traders are, at least in part, the knock-on effect of several factory closures over the past few years, notably Honda’s plant in Swindon, as well as Vauxhall’s historic factory in Luton – although the latter admittedly only produced commercial vehicles in the latter stages of its operation.
Things could soon get a whole lot worse, as new EU-UK Rules of Origin (RoO) laws have the potential to disrupt sales and, in turn, production. Under this post-Brexit trade agreement, EVs exported between the UK and EU must, from January 2027, have at least 55 per cent of their parts manufactured locally – while the battery pack contents must comprise 70 per cent UK-EU materials. Those that do not comply will be hit with 10 per cent tariffs, effectively wiping out any profit margins. Those that do not comply will be hit with 10 per cent tariffs, effectively wiping out any profit margins.
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