The UK automotive sector remains a global trading entity, generating £115bn ($155.62bn) in imports and exports last year, according to the Society of Motor Manufacturers and Traders’ (SMMT) latest Trade Report.
The industry is set to maintain this trajectory for the third consecutive year, overcoming challenges such as tariff barriers and geopolitical uncertainties.
Brexit has transformed trade conditions between the UK and its partners, introducing costs from new customs and regulatory barriers.
Despite the EU-UK Trade and Cooperation Agreement (TCA), uncertainties linger, particularly around battery component definitions and upcoming rules of origin for electric vehicles (EVs).
Bilateral UK-EU automotive trade has underperformed compared to the UK’s trade with other regions.
The slowdown is evident in both export and import values with the EU.
However, the UK and EU automotive sectors remain interconnected, with £68.4bn in annual trade between them, making up 59.7% of all UK automotive trade.
The increasing demand for EVs is driving cross-border trade.
According to the SMMT, UK-EU trade in EVs has surged by 424% compared to pre-Covid levels, reaching nearly £24bn by June 2025.
UK exports of battery electric, plug-in hybrid, and hybrid electric vehicles to the EU have surpassed internal combustion engine shipments.
However, this growth is threatened by the lack of clarity surrounding the tougher rules of origin requirements for batteries and battery components, set to be enforced from January 2027 as part of the UK-EU TCA.
These rules, which include unclear definitions of cathode active materials and challenging local production thresholds, pose a significant challenge.
These rules will impact tariffs on electrified vehicles if local production of battery components does not increase, the SMMT warned.
The industry body urged the government to engage with the EU to clarify these regulations and consider rejoining the Pan-Euro Mediterranean Convention on rules of origin.
SMMT chief executive Mike Hawes said: “Despite the most difficult environment in decades, UK Automotive remains a powerhouse of global trade. With its unmatched diversity and world-class capability, the sector already trades across the world. But the global trading environment is getting tougher, with more competition, more protectionism and more geopolitical tension.
“Forging closer trading relationships, notably with the EU, and implementing industrial and trade strategies with automotive at their heart will enable us to grow our economy, create thousands of highly skilled jobs, and lead the charge toward net zero.”
“UK automotive sector generates £115bn post-Brexit: SMMT” was originally created and published by Motor Finance Online, a GlobalData owned brand.
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