It seems a week does not go by without a negative story being published on the state of the UK’s automotive industry, with the most recent and significant being the cyber-attack on Jaguar Land Rover (JLR). The attack’s impact was so great that it knocked 0.17% off economic output in September 2025. The company’s supply chain was also affected, with the threat of bankruptcy hanging over many SMEs as they grappled with the lack of orders due to production significantly slowing down. Whilst we may see this and other recent cyber-attacks as extraordinary events, it does nothing to offset headlines about the challenges being faced by the UK automotive industry.

Historically, the UK has produced cars since their invention and in 1947 became the world’s largest vehicle exporter. However, there has been steady decline since then and the first six months of 2025 saw the lowest figure of cars and vans being built since 1953. This was swiftly followed by the impact of the JLR cyber-attack, resulting in the lowest levels of cars being produced since 1952 according to the Society of Motor Manufacturers.

Not a new situation

Unfortunately, the current condition of the automotive industry has been a long time in the making. While the industry was thriving after the Second World War, problems were already beginning to appear. Labour intensive methods and wide ranges of vehicles hindered opportunities to reduce costs, and the UK’s were higher than major competitors in Japan, Europe or America. This, combined with underinvestment in technology, car design, production, etc and focused investment in those same areas by key overseas competitors, meant that the UK had fallen to third place as the world’s largest vehicle exporter by 1960.

The situation was also exacerbated by the UK government, predominantly in the 1980s, moving the economy away from being a mixed economy to one more focused on services, especially financial services and the privatisation of state-owned industries. The impact was felt across the automotive industry. While it has remained a key part of the economy since then, the heady days of the 1940s haven’t been reached since.

Current challenges

The industry has found it particularly tough in the last few years as a perfect storm of events have made trading conditions even harder. The introduction of 25% US tariffs on all car imports in 2025 threatened to close off an important export market. Carmakers even paused shipments from April, hoping they would be lowered before they could begin exports again. The recent trade deal with the USA has eased this, but global uncertainty about supply chains, country of origin for parts/components, etc have all dampened appetite for risk and new investment.

Brexit has also had an impact on the success of the industry as it created uncertainty. This led to a delay in investment and came at a time when the industry was starting to move its focus to electric vehicles. While an agreement was made with the EU to continue a tariff free trade, the delays meant that international competitors moved at a far quicker pace than the UK to meet the needs of this new emerging market, with China now claiming a 10% share of new car sales in the country.

The cost of building cars has also continued to soar in the UK as energy prices are some of the highest in the world and labour costs are twice the level seen in central European nations such as Poland, Slovakia and Hungary. The impact of this has meant that car manufacturers have had to make some tough decisions such as the closure of Vauxhall’s factory in Luton in March 2025, leading to the loss of 1,100 jobs. Through all of this, Gleeds has been supporting our clients in the UK and globally with our full range of capabilities to help deliver best in class facilities to meet these challenges.

Tides are turning

While the current state of the automotive industry doesn’t look very healthy, there are some green shoots as the UK gears up for change. The government agreed with the US in June 2025 to 100,000 vehicle exports a year at a lower tariff of 10%. This plays to their vision of increasing the number of cars and vans being built to 1.3 million by 2035. With the industry moving towards a focus on electric vehicles, the government has also announced that buyers of these cars priced £37,000 or under will get a discount of up to £3,750.

Some car manufacturers are making even bolder decisions and completely rewriting their company strategies to embrace the next generation and only focus on manufacturing electric vehicles. For example, Jaguar has recently undertaken an ambitious rebrand. The firm has radically changed its branding, models, etc to reflect a new technological age of cars and in 2026 will launch their new of range of electric vehicles. These will cost around £100,000 and interestingly, Jaguar believes that 80% - 90% of people who purchase them will be first time buyers. The decision to attract a younger consumer base reflects the belief that they will buy into the electric vehicle focused future of the automotive industry.

Diversifying service offering

Companies are also future proofing by diversifying their offering. For example, some automotive suppliers are now providing crash testing or manufacturing rubber and plastic parts which enables them to sell to other trades.

Then there is the move towards the use of fully digital twin technology in car design and manufacturing which create real-world driving conditions and test scenarios without physical prototypes. Businesses can monitor performance in real time, predict failures and optimise maintenance which enhance vehicle safety, reduce downtime and improve overall design efficiency. At Gleeds, we are embracing this digitalisation and enhancing our clients’ projects by applying our suite of digital and AI capabilities, from digital twins of buildings to on-line programme/project reporting and our in-house developed project delivery platform.

Looking towards the future

The common thread throughout these changes is that the automotive industry is now looking at how it can position itself for the future – especially given the large-scale disruptive investment in electric vehicle technologies carried out by China and its major automotive players. The government sees the industry as a pillar of advanced manufacturing, integral to world leading innovation that creates high value jobs, wealth and economic growth. This aligns well with what we are doing in Gleeds across all our sectors to develop our own and our clients’ capabilities in all areas, but especially digitalisation and the development of new talent.

Down but not out

While the UK automotive industry has been through a hard time, it is far from dying. We remain home to car and engine manufacturers as well as motorsport teams and more. However, the industry is far from being in robust health. The UK government and the industry must now work in partnership on its recovery by focusing on the future of the sector and providing the investment and skills required, as the alternative is unthinkable.