UK Automotive Industry Performance Report: H1 2025 Analysis and Sustainable Development Goal Implications

Executive Summary

This report details the significant downturn in the United Kingdom’s car and van manufacturing sector during the first half of 2025. Production levels have fallen to their lowest point since 1953, excluding the COVID-19 pandemic period. The decline presents substantial challenges to the UK’s progress on several key Sustainable Development Goals (SDGs), particularly SDG 8 (Decent Work and Economic Growth), SDG 9 (Industry, Innovation, and Infrastructure), SDG 12 (Responsible Consumption and Production), and SDG 13 (Climate Action). The report examines the causal factors, policy responses, and future outlook for the industry within this sustainability framework.

Economic and Industrial Performance Analysis

Production Slump and Economic Impact (SDG 8)

The UK automotive industry is facing a severe economic contraction, directly impacting its contribution to SDG 8: Decent Work and Economic Growth. The first six months of the year saw a significant decline in output, threatening economic stability and employment within this vital sector.

• Total vehicle manufacturing declined by 12% to 417,200 units.
• This represents the lowest production volume in 72 years, with the exception of the 2020 pandemic lockdown period.
• The downturn has led to job insecurity, exemplified by the planned closure of the Vauxhall van factory in Luton, which puts over 1,000 jobs at risk.
• Revised forecasts for 2025 project total production of only 755,000 cars, a sharp decrease from the 2 million annual target set in 2017 and a reduction from the 815,000 forecast in April.

Challenges to Industrial Innovation and Infrastructure (SDG 9)

The industry’s capacity for sustainable transformation is being tested, affecting progress towards SDG 9: Industry, Innovation, and Infrastructure. External trade pressures and internal transition difficulties are hindering the development of a resilient and innovative manufacturing base.

1. Trade Disruptions: US tariffs of 25% on car imports created significant market uncertainty, particularly for luxury exporters. A subsequent deal allowing 100,000 units to be exported at a 10% tariff provides temporary relief but does not facilitate long-term growth, highlighting the fragility of international trade partnerships (a key element of SDG 17).
2. Transition to Electric Vehicles (EVs): Manufacturers are struggling with the capital-intensive shift from internal combustion engines to EV production, a critical step for building sustainable industrial infrastructure under SDG 9.

Sustainability Transition: Policy and Production

Advancing Responsible Production and Climate Action (SDG 12 & SDG 13)

Despite the downturn, policy measures are being implemented to align the automotive sector with SDG 12: Responsible Consumption and Production and SDG 13: Climate Action. The focus is on accelerating the adoption of zero-emission vehicles.

• The UK government has introduced a £650m subsidy scheme, offering up to £3,750 for the purchase of new electric cars priced under £37,000.
• This initiative is designed to stimulate demand for cleaner vehicles and support the achievement of the UK’s Zero-Emission Vehicle (ZEV) mandate, a core policy for climate action.
• To promote sustainable production patterns (SDG 12), the subsidy includes rules on the carbon dioxide emissions associated with vehicle production, which is expected to favour UK and European manufacturers over imports from China and South Korea.

Challenges in Policy Implementation and Partnerships (SDG 17)

The effectiveness of sustainability-focused policies is being undermined by a lack of collaboration, impacting SDG 17: Partnerships for the Goals. The government’s approach to the EV subsidy has created confusion and could have unintended negative consequences.

• The Society of Motor Manufacturers and Traders (SMMT) noted the subsidy was developed without industry consultation, leading to a lack of clarity.
• Uncertainty over vehicle eligibility and final pricing is expected to cause a short-term drop in sales as consumers await details.
• This confusion may make it more difficult for some manufacturers to meet their ZEV mandate targets, potentially slowing progress towards SDG 13.

SDGs Addressed in the Article

• SDG 8: Decent Work and Economic Growth – The article focuses on the slump in the UK car manufacturing industry, highlighting declining production, economic struggles, and potential job losses, which are central to this goal.
• SDG 9: Industry, Innovation, and Infrastructure – The discussion revolves around the state of the automotive industry, its challenges, and the significant shift towards innovation, specifically the transition to electric vehicle (EV) manufacturing.
• SDG 12: Responsible Consumption and Production – The article mentions the switch to “cleaner electric models” and rules on “carbon dioxide emissions associated with production,” which relate to promoting sustainable production patterns.
• SDG 13: Climate Action – The transition to electric vehicles, government subsidies for EVs, and the “zero-emission vehicle (ZEV) mandate” are all direct policy actions aimed at combating climate change.
• SDG 17: Partnerships for the Goals – The article extensively discusses the impact of international trade policies, such as US tariffs and subsequent UK-US trade deals, on the UK’s domestic industry, highlighting the importance of global trade partnerships.

Specific SDG Targets Identified

SDG 8: Decent Work and Economic Growth

1. Target 8.1: Sustain per capita economic growth in accordance with national circumstances. The article directly addresses a failure to meet this target by stating that UK vehicle manufacturing “slumped in the first half of the year to its lowest since 1953” and that production forecasts for 2025 have been revised downwards from 815,000 to 755,000 cars.
2. Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation. The industry’s effort to “switch manufacturing from petrol and diesel to cleaner electric models” is a clear example of technological upgrading and innovation aimed at boosting productivity in a new market segment.
3. Target 8.5: By 2030, achieve full and productive employment and decent work for all. The article highlights a direct threat to this target, noting that Stellantis’s decision to close its Vauxhall van factory in Luton is “putting 1,100 jobs at risk.”

SDG 9: Industry, Innovation, and Infrastructure

1. Target 9.2: Promote inclusive and sustainable industrialization. The article discusses the challenges facing UK industrialization, with the SMMT chief executive hoping the industry was “at the nadir” before a recovery. The focus on EV production represents a move towards more sustainable industrialization.
2. Target 9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable. The shift from producing petrol and diesel cars to manufacturing electric models like the Nissan Leaf in Sunderland is a direct example of retrofitting an industry to be more environmentally sustainable.

SDG 12: Responsible Consumption and Production

1. Target 12.c: Rationalize inefficient fossil-fuel subsidies… by removing market distortions. While not removing a fossil-fuel subsidy, the government is actively creating a market distortion to discourage fossil-fuel vehicles by providing “£650m” in subsidies for electric cars, which aligns with the spirit of this target by promoting cleaner alternatives.

SDG 13: Climate Action

1. Target 13.2: Integrate climate change measures into national policies, strategies and planning. The UK government’s policies, such as the “zero-emission vehicle (ZEV) mandate” and the subsidy scheme for EVs, are explicit examples of integrating climate change measures into national strategy.

SDG 17: Partnerships for the Goals

1. Target 17.10: Promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system. The article illustrates a challenge to this target, describing how “Donald Trump’s US tariffs of 25% on all car imports threatened to close off an important export market” and caused “global industry chaos.”
2. Target 17.11: Significantly increase the exports of developing countries. Although the UK is a developed country, the principle applies. The article details the impact of tariffs on exports and the negotiation of a “deal with the Trump administration to allow 100,000 exports a year at the lower tariff of 10%.”

Indicators for Measuring Progress

• Manufacturing Output: The article provides specific figures that can be used as indicators for Target 8.1, such as the decline in production to “417,200 units in the first six months” and the revised forecast of “755,000 cars made in 2025.”
• Employment Figures: The mention of “1,100 jobs at risk” at the Luton factory serves as a direct indicator for Target 8.5 concerning employment levels.
• Share of Electric Vehicles: The proportion of EVs in production and sales is an implied indicator for Targets 9.4 and 13.2. The article refers to the “zero-emission vehicle (ZEV) mandate,” which sets specific targets for this share.
• Value of Government Subsidies: The “£650m” allocated for EV subsidies is a quantifiable indicator of government financial commitment to climate action policies (Target 13.2).
• Export Volumes and Tariffs: The article provides clear indicators for Target 17.11, including the “25% tariffs,” the subsequent “lower tariff of 10%,” and the export quota of “100,000 exports a year.”
• CO2 Emissions from Production: The mention of “rules on the carbon dioxide emissions associated with production” to qualify for subsidies implies that CO2 emissions are being used as a key performance indicator for sustainable production (Target 12).

SDGs, Targets, and Indicators Analysis

Source: theguardian.com