Car makers in Britain welcomed a second successive month of increased output in July as demand for new models produced in the UK increased both at home and the US on the back of the UK's trade deal with the United States kicking in.

Passenger car manufacturing rose 5.6 per cent year-on-year to 69,127 units, with domestic demand up 13.6 per cent and exports – which account for four out of five cars made in Britain – also growing 3.7 per cent.

However, progress for the automotive sector stumbled on a massive 81.1 per cent plunge for commercial vehicle outputs.

This decline came against a 17-year record high volume of vans produced in July 2024. 

The Society of Motor Manufacturers and Traders (SMMT), which published the results on Thursday morning, put the drop in commercial vehicle output down to 'plant restructuring'. 

Total output fell by 10.8 per cent as a result, with 72,006 motors rolling off UK assembly lines last month. 

SMMT chief executive Mike Hawes said: 'It remains a turbulent time for automotive manufacturing, with consumer confidence weak, trade flows volatile and massive investment in new technologies underway both here and abroad.

'Given this backdrop, another month of growing car output is good news – signalling the sector's underlying resilience in the face of intense global competition.'

The latest figures mean total vehicle production has fallen 11.7 per cent in the first seven months of the year compared to 2024, although the automotive trade said the latest forecast predicts growth in the region of 6.4 per cent by next year.

With UK car manufacturing hinging on demand from overseas, an increase in foreign appetite is helping British vehicle makers bounce back from a difficult period. 

After three months of falling numbers, exports to the largest single national market in the US increased by 6.8 per cent to almost 10,000 units.

This was aided by the trade deal between the UK and United States.

The reduced tariffs agreed by President Donald Trump and Keir Starmer for UK car imports only came into effect on 30 June - meaning the July figures are the first reflection of how the market has responded to this more lenient deal.

The agreement established a 10 per cent tariff for UK cars - a significant reduction from the plotted 27.5 per cent rate the POTUS had announced.

Luxury car makers, namely Jaguar Land Rover, Aston Martin, Bentley and McLaren, will have seen a huge boost from the deal.

'The US remains the largest single national market for British built cars, underscoring the importance of the UK-US trade deal, and July’s performance illustrates the impact of this deal which came into force on 30 June,' the industry body said. 

However, with the lower rate only subject to the first 100,000 cars shipped across the Atlantic, time will tell to understand if the level of demand is retained over a 12-month period.

July exports also jumped to Turkey (35.4 per cent) and Japan (14.9 per cent).

That said, exports to the EU - Britain's biggest overseas market - fell by 7.9 per cent.

Shipments to China also shrank by 7.1 per cent as the East Asian sector continues to see dramatic growth, reducing the appetite for more expensive European cars compared to those produced by Chinese brands.

Australia, Canada, Korea, the UAE and Switzerland rounded off the top 10 export markets, although combined they represented just 6 per cent of all deliveries in the month.