Two collapses of the UK car industry
Car output in the UK over the last century has been subject to two major crashes. One was in Mr Burnham’s much loved 1970s. The other is happening this decade. Output peaked at 1.92 m vehicles during 1972, our last year before entering the European Community. Many UK brands and past success stories were concentrated in the conglomerate British Leyland. During our first decade in the EEC and its Customs Union output slumped to 868,000 by 1982. BL was taken into government control in 1975 and kept afloat by public money. It struggled to survive with its output plunging from 916,000 cars produced in 1972 to just 405,000 in 1982, a fall of 56%.
The 1980s and early 1990s saw a rebuild of the industry, with the government helping attract in substantial Japanese investment as Nissan, Honda and Toyota added substantial new capacity alongside Ford and Vauxhall. Part of BL was sold off to BMW who were only interested in continuing the Mini as a major product. Industry output recovered from the 1982 low to reach 1.78 m in 1999. The new Labour government took over in 1997. By 2009 as they prepared to leave office output slumped to just under 1 million as the economy battled the banking crash and recession of 2008.In 2005 when the residual Rover Group left over from BL got into financial trouble the government only offered temporary relief so the brands were subsequently sold off to a Chinese company. They decided to make cars under the MG brand in China.
By 2016 under the Coalition and the Conservatives output had recovered to 1.72 m. As net zero policies were rolled out the industry started to lose ground, and lost substantial output over the covid lockdowns, taking it back down to 920,000 in 2020. Instead of sustaining a recovery post covid in recent years a major slide has been underway under both the Conservative and Labour governments. The industry prepares to close all its factories making petrol and diesel cars in time for the ban on making any more of them which comes in in 2030. Output was just 717,000 in 2025 and falling.
Why did the industry fail?
The big falls in the 1970s occurred for three main reasons. The first was the removal of tariffs on cars and the easing of trade barriers against European competition. The UK market saw imports account for just 5% of the total in 1965. This leapt to 56% in 1979, with most of the gains occurring after entry of the UK into the European Community. Continental producers in Germany, France and Italy were good at exploiting the market opportunities whilst the UK failed to stay competitive with product or prices as the tariffs were removed. Leading international groups took advantage of market opening to shift production from UK factories to continental ones to get economies of scale. They integrated their UK production and amalgamated their models with their continental businesses. They no longer thought they needed different designs for the UK from the EEC.
The second was the chaotic labour relations in a strife torn UK . Managers were unable to win over employees and get them to accept positive leadership . Unions wanted to drive wages higher in an inflation ridden economy and were willing to strike often to do so.
The third was the decision of the government in 1975 to buy up 95% of the shares of BL, to direct the business, appoint the Chief Executive and finance the investment. By doing this they acquired control of the largest part of the UK car industry. They with their chosen managers failed to design and produce a streamlined and profitable car range as they played around with the large number of brands and plants they inherited.
Where BL had a good selling product like the Mini they did not charge enough for it to make a sensible profit. They badge engineered the vehicle so they were selling an Austin, a Morris, a Wolseley and a Riley version adding to production and sales costs and competing against themselves with brand promotions. Where they had ageing product as with the main Austin and Morris saloon cars they failed to develop products that could outsell the new popular Ford ,Vauxhall, VW and other European competitors.
The end result is no-one makes and sells cars under most of the brands they once held, including the death of Austin, Morris, Triumph, Wolseley, Riley, Vanden Plas and Rover. Jaguar survived but has not produced a single car for sale over the last year. Mini survived under BMW ownership and launched new models but is now mainly made abroad. Land Rover has survived . MG has changed from making UK built sports cars to making family vehicles running on batteries made in China.
Why has the industry plunged to even lower depths this decade?
The 2020s started badly with covid lockdowns hitting all European producers. Now well into what should be a sustained recovery the UK has continued to decline. The main reason is government decisions to force the pace of transition from making diesel and petrol cars to making just battery vehicles. The UK industry failed to explain to the government that their timetable was too demanding. The main players accepted the unrealistic targets set only to discover there were not nearly enough willing buyers of battery cars. Government tipped in some modest subsidies for the new electric vehicles and made it dearer and more difficult to buy petrol or diesel. Electric cars are spared high taxes on fuel, unlike the fossil fuel based alternatives. They have favourable tax treatment when bought by companies. Still they remain a minority choice of the public. At the same time diesels in particular have experienced a very sharp decline adding to the difficulties of car makers. They have to rush to write off their investments and move to close plants.
On the other side of the account the manufacturers have failed to put in much new electric capacity. Jaguar has gone a year without a car to sell and is only just getting round to offering a single choice of vehicle with battery propulsion at a much higher price than many of the older petrol and diesel cars that sold well. It is putting in a large battery plant but will be launching dear new vehicles which will not be affordable in the mass market. Range Rover is planning new all electric products. BMW is making most of its all electric Minis outside the UK. A major investment plan to make larger car batteries in the UK was dropped. Nissan is the one large manufacturer that has committed to switching production to new EV cars with UK made batteries. Government and other companies over the last seven years have watched as China has cornered the market in materials and components needed to make batteries, and has launched big ranges of battery cars at very competitive prices.
How much of the UK car industry will revive?
The government is determined to end all production of petrol and diesel cars in three years time. It wants the production lines and many of the factories closed. It looks as if that is going to happen. Vauxhall, Ford, Honda and other makers of petrol and diesel cars in prior years are not planning to make any battery cars in the UK. Toyota is also importing EVs but has said it might later start to produce a battery car in the UK. There is no firm project or timetable. The industry will be a lot smaller than in its heyday. Many jobs making petrol and diesel cars will go, much capital will be written off and the UK will be importing far more from China.
The industry is keen to see the UK adopt Made in Europe rules and standards and to impose a high tariff on Chinese imports. This is unlikely to make much difference to the many plans for leading manufacturers to cease making cars in the UK or to avoid returning to UK manufacture. The higher the Chinese tariff wall imposed the more they might be able to switch some of our imports from China to EU factories. This would come at the cost of a slower transition to battery cars and would give the UK consumer a worse deal.
October 23, 2026
The one and only reason why or motor industry went to the wall is because of the cheaper foreign imports to appease the common market as it was then and now, the other main reason was the greedy union barons who didn’t give a toss about the U.K. but the big fat pay cheques they were picking up from there gullible members with the help from the liebour party
October 23, 2026
A factor omitted from Lord Redwood’s article is that unlike many countries the UK banned not only petrol and diesel cars but also hybrid petrol/electric. It may not be critical but it would have provided an additional market for both ICE and battery manufacture. This might have led to continued investment in UK car manufacture. Also hybrid vehicles use far less petrol than petrol only cars so these produce far less CO2 in their emissions. For example my Toyota Camry Hybrid does 45-50mpg with a 2 litre engine. This is just engineering based on the two types of engine having torque and power curves that can compliment each other for improved economy that appeals to all motorists.
It is interesting that although Australia also has Green energy policies it has not banned hybrids which are much more popular than electric vehicles – 28% of the light vehicle market compeared with 21% for electric only vehicles. ICE, petrol and diesel, take the remaining 51%. In UK ICE still takes 49% and you have had all the political controversy to boot. Of course the Green fanatics will claim that as a success because hybrids use ICE, but the cost is yet another deep political divide putting the government at odds with the people and becoming more dictatorial across all policy areas. Allowing hybrids is closer to a free market and hence stable or at least more predictable conditions for investment decisions and more democratic government.
October 23, 2026
PS to my first comment. It is interesting that even the EU back tracked from its total ICE ban to permit hybrids in late 2025. Norway has retained an all electric policy but then it has cheap and Green hydro-electricity by the bucket load. For UK that is not an option. Now it must burn CO2 both for electric power and for importing the vehicles and components it no longer manufactures.