UK automotive production slumped in September, with figures from the Society of Motor Manufacturers and Traders (SMMT) showing a sharp decline across both car and commercial vehicle output.
The trade body also issued a warning that Government plans to end Employee Car Ownership Schemes (ECOS) could deal a major blow to company car drivers and the wider market.
Car production fell 27.1% year-on-year to 51,090 units, while commercial vehicle (CV) manufacturing dropped 77.9% to 3,229 units, marking the sixth consecutive month of decline.
Combined car and van output was down 35.9% to 54,319 units.
The fall was largely driven by the production halt at one of Britain’s largest automotive employers following a cyber incident, alongside the consolidation of operations at a major CV manufacturer.
Despite this, other volume manufacturers reported growth, with almost half of all cars built in September (47.8%) being battery electric, plug-in hybrid or hybrid models – up 14.7% to 24,445 units.
However, the SMMT warned that plans to reclassify ECOS vehicles so that they are taxed as company cars could cause lasting harm to the industry, the workforce, and the company car sector that underpins much of UK automotive demand.
The association said ECOS are a vital part of many manufacturers’ remuneration packages, allowing employees to affordably drive the vehicles they produce and sell.
The proposed tax change could impact up to 60,000 automotive workers, reducing pay and removing access to personal transport – at a time when the sector is already facing a critical skills shortage.
The SMMT’s analysis suggests the move could lead to 80,000 fewer new car sales annually, a reduction of 20,000 UK-built vehicles, and a £1bn loss in revenue.
It would also put around 5,000 manufacturing jobs at risk and cost the Treasury nearly half a billion pounds in lost VAT and Vehicle Excise Duty.
Mike Hawes, chief executive of the SMMT, said: “September’s performance comes as no surprise given the total loss of production at Britain’s biggest automotive employer following a cyber incident.
“While the situation has improved, the sector remains under immense pressure. The move to scrap ECOS immediately puts at risk the Government’s ambition to restore UK output to 1.3 million units per year.
“It must be reversed given the damage it will inflict on the sector, the company car market, and exchequer revenues.”
The warning came ahead of the Chancellor’s Budget on 26th November.
The SMMT urged the Government to maintain ECOS incentives and align fiscal measures with its Modern Industrial Strategy to protect jobs, attract investment and sustain company car fleets, which remain a cornerstone of the UK’s new vehicle market.
So far this year, UK factories have produced 582,250 cars and vans – a 15.2% fall compared with the same period in 2024.
The SMMT said targeted interventions such as maintaining ECOS, bringing forward energy cost support under the British Industrial Competitiveness Scheme, and reforming skills funding could help stabilise the sector and protect the crucial company car and fleet markets.
Philipp Sayler von Amende, chief commercial officer at Carwow, said: “Ups and downs in manufacturing are nothing new for the car industry, but news that the UK’s car production dropped by -27.1% in September is nonetheless concerning, especially in what is typically a peak month of the year for domestic demand.
“While the Government’s Electric Car Grant has encouraged more drivers to consider electric vehicles, the UK car industry is already battling multiple headwinds: from cyber-attack-related factory closures to the prospect of new micro-chip supply chain constraints from China.
“One thing we learned during the last supply chain crisis in 2022 is that manufacturers tend to prioritise the production of electric vehicles to help meet tough emissions targets. As a result, we may see supply of petrol and diesel models impacted more severely, or earlier, than EVs in the near term.”
