The UK car industry is at a turning point, facing great uncertainties that jeopardise its future sustainability. Once a thriving sector, the automotive manufacturing landscape in the UK has witnessed a prolonged decline, raising questions about its future. The industry has suffered a string of disappointments. Just last week, Nissan announced it would cease making its electric Leaf model at the Sunderland factory by 2024, once touted as the source of about 30,000 units annually.
In the early to mid-2000s, the UK motor industry was lauded for its high output per person. In 2016, the country produced 1.82 million new vehicles—the most production since 1999. Sector hit hard by COVID-19 In 2020, the industry experienced a profound change. In turn, it suffered a third of its output evaporate—lower output than we’d had in almost 33 years, since the mid 1980s. Impacts It goes without saying that the automotive sector remains a key pillar of £22 billion a year to UK economy, argues Society of Motor Manufacturers and Traders (SMMT). In 2023, it was the largest employer of PhD-trained scientists.
During the first half of 2025, the UK automotive sector only managed to build 417,000 new cars and vans. The future is far from clear as UK producers face some of the steepest power costs in the world. The ambitious UK government is swinging for the fences with its recently announced target to increase annual vehicle production to 1.3 million by 2035. According to some projections, only 803,000 will be rolling off assembly lines next year.
The rise of China-based automotive behemoths, like Dongfeng and Chery Group, adds to the confusing mix. For both of these companies, the transition to electric vehicles is a major new opportunity to grow their businesses in Europe. Well-known luxury brands including Rolls Royce, Bentley, McLaren and Lotus highlight UK’s automotive history and pedigree. There are serious questions about whether this legacy will be able to stand the test of time, when that competition continues to ramp up internationally.
The potential closure of the Vauxhall van factory in Luton poses a significant threat to the regional economy, forecasting an annual loss of £300 million. Gary Reay, a representative from the Unite union, raised an alarming trend. Many workers are feeling the sting of immediate pay reductions as the industry continues working through these rough waters.
We spoke to experts about what the heightened fears of job loss in this sector mean for higher ed, and beyond.
“Losing these good quality jobs would have a big impact in terms of wages for workers and also a knock-on effect in terms of the multiplier on the local economy.”
Many others are still deeply tied to the automotive manufacturing. Rich Dixon taught us to keep a balanced portfolio.
“The last thing you want to be is 100% automotive.”
He expanded on this anxiety and added that most of these larger firms are reliant on automotive production.
“The difficulty is that higher up the food chain, there are some big companies that are very reliant on automotive.”
Dixon thinks some companies have just been lucky, thanks to their business models which are more diversified.
“I think we’re lucky in some ways, because 60% of our business is diversified across many different industries.”
The debates about localization of auto manufacturing are changing too. Production and industry-focused stakeholders emphasized the need to raise consumer expectations about how things are made and where.
“I do think people are [becoming] much more aware of where things are made.” – Mr. Fowler
Yet, he noted, this awareness is not just based on a sense of nationalism. It is ever-connected to an emerging awareness of sustainability issues.
“This isn’t necessarily a nationalistic thing, but more a sustainability thing. Do you want your car to have travelled halfway around the world to reach you?”
Even in the face of these daunting challenges, Fowler was hopeful about the UK’s capacity for car production.
“The UK is a great place to make cars; we have incredible expertise, we have some of the best engineers and people who can build them better than anybody else.”
Other executives are much more doubtful about new entrants to the market.
“I don’t see much opportunity for new players to come in.”
Short of an immediate industry wide transformation, former Aston Martin CEO Andy Palmer offered direction on what possible routes to reinvention may look like.
“It’s all about encouraging those who are already here to stay, and if possible to expand.”
Palmer emphasized the importance of doing all we can to keep jobs in this important industry.
“If you embrace the move to electric vehicles and become a leading light in attracting Chinese investment, then you can do what China did to us in the past, which is essentially use collaboration to rebuild your industry.”
The issues affecting the UK automotive industry are deep, wide and complicated. At this critical juncture, stakeholders are further challenged by economic headwinds and growing global competition. They must be ambitious in innovation and sustainability. The industry’s future depends on more than just hitting production targets. Dynamic partnerships and innovative investments will shore up its place in the fast-moving world economy.
“There is a critical mass of employment.”
The challenges facing the UK automotive industry are multi-faceted and complex. As it stands at this pivotal moment, stakeholders must navigate economic pressures and fierce international competition while striving for innovation and sustainability. The industry’s future depends not only on production targets but also on strategic collaborations and investments that can bolster its position in an evolving global market.