UK vehicle making hits lowest level since 1953
Car output fell 7.3% in the six months to June while the closure of Vauhall's Luton van plant helped drive van production down 45%, data from the Society of Motor Manufacturers and Traders (SMMT) shows.
Uncertainty over tariffs in the US – the UK industry's second biggest market – meant some firms slowed or stopped production in the first half of this year.
SMMT said the US-UK tariff deal which has since come into effect could help confidence, while the government said its electric vehicle (EV) grants would "boost" the industry.
The SMMT welcomed the EV grants, but it said the new system lacked clarity and had been introduced without consulting the industry.
Mike Hawes, SMMT chief executive, said the half year production figures were "depressing" but that he hoped that the first half of this year marked "the nadir" for the UK auto industry.
A deal with the US to reduce tariffs from 27.5% to 10% was announced in May came into effect on 30 June, with SMMT recording a small rise in vehicle production in June.
What is in the UK-US tariff deal?
Car maker Stellantis says US tariffs have cost it €300m
However, the SMMT does not expect to return to 2021 production levels of one million vehicles by the end of the decade.
Mr Hawes said that the government's target of 1.3 million vehicles per year by 2035 was "quite some ambition from where we are", adding that "we clearly require at least one, if not two, new entrants to come into UK production" to hit the target.
Production of electrified vehicles rose 1.8% with battery, hybrid, and plug-in hybrid vehicles accounting for a record of more than two in five of vehicles produced.
Last week the government confirmed it will reintroduce grants of up to £3,750 on some EVs are priced at or below £37,000.
While the SMMT welcomed the return of incentives that were abolished in 2022, there is widespread confusion about which vehicles will qualify for the discounts.
The eligibility and level of discount will be determined by the amount of carbon emitted in the production of the vehicle and its battery. They will only be offered to manufacturers that have verified science-based targets with thresholds the government has not yet defined.
It's expected that Chinese and Korean vehicles will not meet the criteria but little else is clear.
"The difficulty is, we don't know. Nobody knows, but nobody, not even government, really knows yet, which models and which brands will qualify," said Mr Hawes.
"I think the industry is still trying to get clarity behind its application. Right now your dealer cannot tell you whether the model you are considering is eligible."
He said clarity was needed soon as September is the second biggest month for new car registrations.
A transport department spokesperson said it expects "dozens of models to be eligible for the electric car grant, which will provide a substantial boost for the industry and save drivers thousands of pounds".
"We want the discounts to become available to drivers as soon as possible, and we are engaging extensively with vehicle manufacturers and have published guidance to help them apply as easily as possible," they added.
The £650m of grant money will be awarded on a first come first served basis.
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