What happens in Europe matters to UK Automotive  

 
New data published by SMMT this week shows the fourth monthly decline in vehicle manufacturing in November which, while disappointing, is unsurprising given it continues trends seen across the year. With car factories retooling to produce EVs, volumes gradually normalising after a cyber incident and the consolidation of the UK’s volume van production from two plants into one, the challenges have been obvious, but industry can be more optimistic about a return to growth in 2026. A tangible sign of that increased positivity was the start of production of the next-generation Nissan LEAF in Sunderland after a £450 million commitment – a major boost for the Company, region, supply chain and economic growth for the country.
 
Attracting more investment is paramount and, for our export-led sector, that requires strong trading relationships. This week’s agreement of a modernised UK-South Korea FTA was extremely welcome, maintaining permanent tariff-free access, introducing workable rules of origin and increased cooperation across the supply chain. The EU, however, remains the biggest market for UK automotive exports and the largest source of products for UK car buyers, particularly EVs – so what happens there matters.
 
The European Commission’s Automotive Package, announced this week, seeks to respond to some of the challenges facing the industry. It proposes allowing a greater range of technologies beyond 2035  – attempting to provide Europe with increased flexibility to manage a sustainable transition – without compromising the ambition. This will, however, put the UK out of step with our biggest trading partner so the UK government’s review of our own regulation may need to be brought forward to ensure it considers the global context alongside all aspects of market performance. 
 
There is an additional concern for the UK, however, with the Commission’s proposals to tie the new regulatory flexibilities to EU-produced cars and vans. Excluding like-minded trading partners – especially the UK which is the EU’s largest market for finished vehicles and parts – would be counterproductive for both sides. The measures risk raising costs and limiting choice for EU consumers, impacting supply chain resilience, undermining regional integration and damaging mutually beneficial trading relationships. Instead, to boost mutual competitiveness, the UK and EU must deepen their industrial partnership, maximising the EU-UK Trade Cooperation Agreement and including UK-made automotive content under any ‘Made in Europe’ definition. 
 
Now more than ever, the UK automotive industry needs champions. One of our most committed champions is Matt Western MP, who this week stood down from his role as Chair of the All-Party Parliamentary Motor Group, which he has led through myriad challenges since 2019. We are grateful to Matt for his unswerving support, and pleased that the baton has passed to Justin Madders MP – another strong advocate for our sector, and whose Ellesmere Port constituency is home to Europe’s only all-electric van plant. We look forward to working with Justin and all other APMG members to maintain this valuable forum for cross-party discussion. 

With this newsletter returning on Friday 9 January, on behalf of everyone at SMMT, I hope you have a restful and enjoyable festive break and a happy and prosperous 2026.