Two critical months for UK automotive 

September’s 36.3% rise in vehicle production is welcome, but does not tell the whole story. The comparison largely reflects last September’s cyber disruption, which halted production at Britain’s biggest automotive employer. Output remains down -3.0% this year and while new models entering production, mostly electric, should support recovery in 2027, this cannot be taken for granted. 

The next two months will test Britain’s ability to translate its reindustrialisation ambitions into tangible investment that supports skilled jobs and stronger supply chains, but the industry faces multiple threats. Potential ‘Made in the EU’ barriers threaten access to our biggest export market, while tougher TCA rules of origin – due in January – risk tariffs on the very electrified vehicles we need to sell. Ahead of next month’s UK-EU summit, the UK government must work urgently with European partners to protect our shared €80 billion automotive trading relationship. A resolution is firmly in both sides’ interests. 

Securing that market access must, however, be matched by a workable domestic transition. This week’s Budget affirmed the ZEV Mandate review will conclude this year, with changes effective from the start of 2027. Government must meet that deadline with meaningful reform that closes the widening gap between natural demand and regulatory targets. Marginal adjustments will not be sufficient, particularly when other policies pull in the opposite direction. The EV-specific tax, eVED, confirmed in this week’s Budget to commence in 2028, and Wednesday’s decision to clarify the law applying higher VAT on public compared to domestic charging, risk discouraging the very drivers the transition needs to persuade. 

Industry’s commitment is unequivocal: billions invested in UK factories, supply chains and new models, with around 180 battery electric models available and more coming – whatever the review decides. On top of that investment, manufacturers have also funded at least £10 billion in discounts in the Mandate’s first two years. That level of support is unsustainable. It erodes profitability, depresses residual values for consumers and diverts resources from the products and production capacity needed to decarbonise. 

Reforming the Mandate is not a retreat from electrification. If automotive is to participate in UK reindustrialisation, policy must make Britain competitive, help consumers switch and enable manufacturers to invest, rather than spend ever more bridging the gap between regulation and demand.

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