No worse time for damage to UK-EU trade

The ‘Made in Europe’ proposals set out this week in the European Commission’s Industrial Accelerator Act are gravely concerning for the sector given, as drafted, they would discriminate against UK-made vehicles and components – damaging a trading relationship worth almost £70 billion annually. It is a position that the UK industry and government sought to avoid, given Britain and the EU are each other’s largest customers and suppliers.

The strict EU assembly rules and EU27 eligibility criteria currently proposed would effectively put UK manufacturers at a systemic competitive disadvantage, with financial support for the greening of corporate fleets – potentially affecting 50-60% of the EU new car market – and ‘supercredits’ for small electric vehicles offered exclusively to vehicles assembled in the EU, rather than elsewhere in countries with which the EU has a preferential trade agreement. That puts up barriers between the UK and its largest export market and may also be in breach of the EU-UK Trade Cooperation Agreement – the Brexit deal – which both sides had worked at great length to secure.

Finding a resolution – extending full, trusted partner status to the UK automotive sector – is not only about ensuring choice for consumers, particularly of zero emission vehicles, on both sides of the Channel. It is also about delivering the economic growth and security everyone craves, which is why the UK government and European counterparts must work together, urgently, to resolve the situation.

In more positive news, there was further evidence this week of recovery in the UK new car market. SMMT figures published yesterday showed a 7.2% rise in demand in February – the highest volume for the month since 2004 – driven largely by private buyers although fleet demand remains the largest source of UK registrations (as it does, for that matter, in the EU). EV volumes are also growing, up 2.8% and representing nearly a quarter of the February market – but are worryingly still well below the 33% mandated target for this year.

Manufacturers, with a combination of new models and massive incentives, and government, with its grant scheme and new advertising campaign, have invested billions to drive uptake. The first two months of 2026 show how natural demand still lags ambition for passenger cars but also – to an even greater extent – for vans. Modest overall growth of 1.1%, and a rise in electric van demand is certainly good news, but EV uptake remains less than half of this year’s mandated targets.

Furthermore, with Government plans to introduce a pay per mile tax for electric cars from 2028 and the sale of new pure petrol and diesel cars required to cease in less than four years, the pressure on manufacturers to increase demand is acute. Circumstances have changed beyond expectation since the ZEV Mandate regulation was set and, indeed, global uncertainty shows no sign of easing so a holistic review of the transition is needed urgently.

Debate on these issue and other key issues facing the UK’s transition will be front and centre at a now sold-out SMMT Electrified next Thursday, and I look forward to seeing many of you there.