In brief
The SMMT warns that EU trade measures could delay the UK’s automotive recovery, forecasting a 2026 decline before a 2027 rise to 752,000 units mainly from electric vehicles. The organization cites the ‘Made in EU’ proposals and new rules of origin that could impose £1.4 billion in tariffs. It urges the upcoming EU‑UK Summit to negotiate solutions that protect the €80 billion trade relationship.
On 29 October 2026, the Society of Motor Manufacturers and Traders (SMMT) issued a warning that European Union trade measures could impede the projected recovery of British vehicle production, according to a Xinhua report. The concern centres on EU proposals that could effectively bar UK‑built cars from the EU market and on stricter rules of origin that may trigger significant tariff costs.
The SMMT’s industry outlook predicts a decline in annual vehicle production this year, followed by a rise to 752,000 units in 2027. The increase is largely driven by the introduction of new electric‑vehicle models into production lines.
Three major threats to the industry’s competitiveness were identified, two of which relate directly to the UK’s trading relationship with the EU. The first is the European Commission’s “Made in EU” proposals that, in their current form, could exclude British‑built vehicles from the Union’s single market. The second threat arises from tougher rules of origin that take effect under the 2027 Trade Cooperation Agreement.
According to the SMMT, the new rules of origin could result in tariffs totaling 1.4 billion pounds (approximately 1.9 billion U.S. dollars) annually on two‑way electric‑vehicle trade between the UK and the EU. The tariff estimate reflects the potential cost of re‑structuring supply chains to meet EU criteria.
Exports account for more than three‑quarters of British vehicle production, with the EU receiving 57.5 per cent of those exports, according to SMMT data. The heavy reliance on EU markets underscores the potential impact of the proposed measures on the industry’s profitability and competitiveness.
In addition to trade‑related risks, the SMMT highlighted that “unrealistic domestic electric‑vehicle sales targets” are placing manufacturers under acute pressure. The society warned that such targets erode profitability, divert resources, and undermine the attractiveness of the UK as an investment destination for automotive firms.
Both measures, the SMMT said, would damage the automotive industry on both sides of the Channel and called the forthcoming EU‑UK Summit “a vital opportunity to agree pragmatic solutions and safeguard an 80‑billion‑euro (about 90 billion dollars) trading relationship.”
The society’s statement stresses that the summit is crucial for negotiating safeguards that preserve the existing €80 billion trade tie and mitigate the potential tariff‑induced losses for UK manufacturers and their European partners.
While the SMMT’s outlook offers a clear economic forecast, uncertainties remain. It is still unclear how the EU will interpret the “Made in EU” proposals, whether the 2027 rules of origin will be applied in the manner projected, and what specific agreements will emerge from the EU‑UK Summit to protect British vehicle production.
