UK car production: domestic sales & exports 2003-2021

In 2021, demand for UK-built cars dropped by almost eight percent year-on-year to some 859,600 units. The United Kingdom exports eight out of 10 cars assembled in UK plants.

Vulnerability to trade disruptions

Sales and exports of UK-manufactured vehicles began to fall in 2016. Slumping investments amid Brexit fears as well as higher costs of production are likely to have contributed to a slowdown in demand. Since the UK’s referendum on membership of the European Union, the British pound has fallen in value. This may have been expected to be good news for exporters who garner more interest with relatively cheaper products. However, the weak pound is not favorable for vehicle manufacturers due to their international supply chains. The European Union is the UK auto industry's leading trade partner, accounting for roughly 80 percent of component imports. EU markets also account for the majority of UK car exports.

Impact of the coronavirus pandemic

The coronavirus pandemic led to historically low sales of new cars in European Union member countries and the UK. In response to COVID-19, car showrooms were closed in the United Kingdom throughout the spring of 2020 and were restricted for many months after. Vehicle manufacturing facilities also faced temporary closure due to the pandemic. Costs increased, as output volumes of parts and finished products fell in tandem with supply chain disruptions. The UK automotive industry is highly dependent on exports to the European Union and faces strong headwinds, as the pandemic may make new vehicles less accessible to EU consumers facing a contraction in expendable income. The pandemic is expected to reduce economic growth in the European Union. Consequently, car intenders in Europe who have lost income as a result of the pandemic may choose to buy used cars or put off buying entirely.