UK probably needs large new factory to meet target of 1.3m cars a year, say industry boss
A target of building 1.3m cars a year is likely to be missed unless a large new UK factory is built in the coming years, an industry group has said, as Keir Starmer prepares to hold trade talks in China.Labour aims to have 1.3m vehicles rolling off production lines by 2035, a central ambition of its industrial strategy.That would nearly double the 764,715 cars and vans made in 2025, according to new data from the Society of Motor Manufacturers and Traders (SMMT).
UK vehicle production slumped 15.5% in 2025 compared with the previous year, hitting its lowest point since 1952 apart from during Covid-19 lockdowns.Chinese manufacturers are seen as the most likely to build new electric vehicle assembly plants in the UK.Mike Hawes, chief executive of the SMMT, said to hit that target the UK would need to “keep what you’ve got, grow what you’ve got, and then also try and attract some additional inward investment … To get to 1.3 [million] you kind of need a new plant.
”Starmer arrived in China for his three-day visit to Beijing and Shanghai on Wednesday, alongside a delegation that included executives including from carmakers Jaguar Land Rover (JLR) and McLaren, and Octopus Energy, one of the biggest owners of electric cars,Hawes pointed to the trip as a potential catalyst for new investment, adding: “In terms of who is expanding their production globally, it’s the Chinese,There is dialogue taking place,”Hawes called it “the toughest year in a generation” after the industry was buffeted by US trade tariffs, turmoil at Nissan and a cyber-attack that crippled production at JLR in August and September,However, he also pointed to hopes of a recovery driven by EVs in 2026, after a record 41.
7% of new cars produced, or 298,813, were battery electric or hybrid last year, up 8.3 percentage points compared with 2024.Hopes are growing that a Chinese company will build a factory in Britain after a surge in sales of the country’s cars to UK buyers last year.Chinese cars accounted for 9.7% of UK new car sales in 2025, nearly doubling their market share in 12 months as brands led by MG, BYD and Chery, which also runs Jaecoo and Omoda, pushed into the UK which, unlike the US or the EU, has not imposed tariffs on imports from the country.
Chery said last summer that it was “actively considering” building a plant in the UK as part of a “localisation” strategy.Hawes said: “The fact that the UK has always stood for free and fair trade and open trade, and it’s been welcoming for investors for many decades, puts us in a position where we can say that we are very we are open.”Asked why Chinese companies would invest in a plant in Britain when they already have well established manufacturing bases at home, Hawes said: “In this volatile world, producing close to where you sell gives more assurance and certainty to your business.”“If you are going to grow the industry, we need investment in new models here – and when you talk about new entrants there is really only one game in town,” he added, referring to Chinese carmakers.
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