UK car production grew 21.0% in January, marking the fifth straight month of growth.

The SMMT said January’s figures showed rising global demand for British-built brands

Volumes soared to 82,997 units in the best January performance since 2021, showing abating supply challenges and rising global demand for British-built brands.

Overseas shipments grew 11.6% to 62,938 units – a rise of 6,559 – and accounted for the bulk (75.8%) of production. However, output for the domestic market saw the biggest volume growth, up by an additional 7,863 units (+64.5%).

The EU was the largest global market for British-built cars, taking more than half (53.2%) of exports, followed by the US (15.0%), China (10.5%), Japan (2.8%) and Australia (2.3%). Shipments to the EU, US and China all rose, by 5.0%, 81.1% and 33.2% respectively.

UK production of battery electric (BEV), plug-in hybrid (PHEV) and hybrid (HEV) vehicles rose again by a combined 4.5% to 29,590 units to account for 35.7% of overall output.

Mike Hawes, SMMT chief executive, said: “A positive start to the year for UK car production bodes well for the industry and the many thousands of livelihoods on which it depends. There can be no room for complacency, however, given economic headwinds and geopolitical tensions. There must be a relentless commitment to competitiveness, building on the significant recent investments into the sector.

“The forthcoming Budget is a chance for Government to do just that by introducing measures to boost UK automotive manufacturing, focused on energy, investment competitiveness and market demand.”

Richard Peberdy, UK head of automotive for KPMG, said: “Electric vehicle demand is largely being driven by low Benefit-in-Kind tax and write-down allowances for businesses, including company car and salary sacrifice schemes for employees. But growing private sales of new EVs is proving challenging.

“The UK automotive industry is hoping that the Budget contains measures to incentivise consumer EV purchasing, whilst also hoping for further measures to attract inward investment and boost the UK car industry’s competitiveness.”

Lisa Watson, director of sales at Close Brothers Motor Finance, commented: “Whilst another increase in UK car manufacturing will provide further optimism for the year ahead, the Government’s zero emission vehicle (ZEV) mandate, which requires 22% of new cars manufactured this year to be electric, may cause headaches for manufacturers.

“The Government’s £2bn pledge to the UK automotive manufacturing industry at the back end of 2023 was a step in the right direction to ensure the UK keeps up with battery production demands. However, manufacturers will be keeping a close eye on the Chancellor’s Spring Budget next week as more needs to be done to accelerate infrastructure development, such as installing charging points, if the UK is able to support widespread adoption to electric vehicles.

“This is currently acting as a barrier to EV adoption for consumers, who are still hesitant about making the switch. Whilst 28% of those looking to purchase a car this year plan to buy a hybrid, according to our recent research, only 12% plan on buying an EV – down from 14% last year.”

In terms of overall light vehicle demand, the latest independent market outlook, made in November, foresees UK car and light van production rising by some 3% in 2024 to 1.04 million units – however, the SMMT noted that the scale of any impacts on UK car manufacturing due to attacks on shipping in the Red Sea has yet to be seen.