UK car production slumped by over a quarter in March as manufacturers retooled factories for electric cars.

The drop was in line with expectations for a variable year, as manufacturers adjust factories to produce the next generation of cars, notably EVs

Output was down 27.1% year on year to 59,467 units in the first fall since August 2023, the Society of Motor Manufacturers and Traders (SMMT).

The industry body said the drop was in line with expectations for a variable year, as manufacturers adjust factories to produce the next generation of cars, notably electric, winding down volumes of existing models in the process. Nissan recently pulled the plug on Sunderland production of its current Leaf electric car, ahead of the 2026 arrival of its successor, as it transforms the plant into a flagship electric vehicle hub.

The early Easter bank holiday also played a part, with fewer working days this March than the year before.

Volumes for home and overseas markets were both down in March, declining 0.3% and 35.9% respectively. Continuing recent trends, the European Union received by far the bulk of exports (57.9%) followed by the US (11.4%), China (5.9%), Australia (4.0%) and Japan (1.8%). Shipments to the top five export markets, apart from the US, all fell.

Volumes for electrified vehicles – spanning battery electric, plug-in hybrid and hybrids – a again represented more than a third (38.4%) of all production. In total, 22,865 EVs of some form were produced, although this was down 29.7% on the year before, in part reflecting the wider issues, notably model changeovers.

Despite the fall in March, car production remained up 1.1% in the first quarter, at 222,371 units, with a 33.9% rise in output for the UK offsetting a 7.4% decline in exports. Despite this fall, by far the majority – 72.7% – of all cars made in Britain in Q1 were for export.

The latest independent production outlook now expects UK car and light van production to fall 6.2% to some 940,000 units this year, mainly due to multiple model changeovers, before returning to growth in 2025.

Output is anticipated to get back above a million units from 2026 and reach 1.2 million before the end of the decade as more EV production comes on stream across the UK.

The sector continues to call for improved UK competitiveness, especially on energy, trade and skills.

Mike Hawes, SMMT chief executive, said: “We can expect further volatility throughout 2024 as manufacturers lay the foundations for a successful zero-emission future. Recent investment announcements have boosted confidence and enhanced the UK’s reputation but there needs to be an unrelenting commitment to competitiveness.

“Free and fair trade deals must be secured, energy costs reduced and the workforce upskilled if we are to attract further investment to improve productivity and decarbonise automotive manufacturing and its supply chain.”

Richard Peberdy, UK head of automotive for KPMG, said: “The majority of UK car production has been for export and for increased fleet buying domestically. This fleet buying also includes employee vehicles via salary sacrifice leasing schemes – a sizeable proportion of all electric vehicle sales in the UK right now.

“Consumer new car sales aren’t faring as well so far in 2024 though. Private sales are down, as is EV market share. Car sellers will continue to discount to try and address this. Increasing consumer demand for EVs is particularly important now that car makers are mandated to increase the percentage of zero-emission new car registrations annually.”