UK factories built 35.9% fewer vehicles in September after major manufacturer JLR was knocked offline by a cyber incident. Now the sector is accusing Westminster of unfairly taxing its own workers, putting Britain’s economy at risk.
Britain’s car factories have suffered their sharpest downturn in decades after a major cyberattack paralysed output at Jaguar Land Rover, the country’s biggest manufacturer.
New figures from the Society of Motor Manufacturers and Traders (SMMT) show car production fell by 27.1% in September, with just 51,090 vehicles leaving UK factory lines.
The hit was even worse when accounting for all vehicle types, including vans — down 35.9% year-on-year. This came as the five-week JLR cyber incident forced an unprecedented shutdown and separate restructurings cut commercial vehicle output.
“September’s performance comes as no surprise given the total loss of production at Britain’s biggest automotive employer following a cyber incident,” said Mike Hawes, SMMT’s chief executive.
“While the situation has improved, the sector remains under immense pressure.”
The figures mark the lowest September production level since 1952, according to industry data and the SMMT's long-running archive, highlighting the fragility of a sector still recovering from pandemic-era disruptions and supply chain shortages.
There were, however, signs of continued investment in green technologies. Almost half of the cars built last month were electrified models such as battery electric, plug-in hybrid, or hybrid.
SMMT added that overall production for the domestic market fell by 34.1%, while exports dropped 24.5%. Most shipments were bound for the EU, the United States, Turkey, Japan, and South Korea.
Meanwhile, commercial vehicle production plunged 77.9%, extending a six-month decline as one major manufacturer consolidated operations.
Budget negotiations deepen the crisis
The slump comes just weeks before the Autumn Budget on 26 November, when the government is expected to finalise fiscal measures that could reshape the automotive workforce.
At the heart of industry concern is the planned abolition of Employee Car Ownership Schemes (ECOS), a tax change that would reclassify vehicles provided under these schemes as company cars, making them subject to higher tax rates.
The ECOS scheme lets car factory workers buy the cars they build without paying the full company car tax — kind of a staff discount through payroll.
If the government ends that scheme, those workers would suddenly face big new taxes on their own cars. That could reduce demand for vehicles, prompting anger among carmakers.
According to SMMT analysis, ending ECOS could affect 60,000 automotive workers, reduce new car sales by 80,000 units a year, and cost the Treasury nearly £500 million or €573.36mn in lost tax receipts.
The group estimates the wider hit to the UK’s industrial base at more than £1 billion (€1.15bn), threatening around 5,000 manufacturing jobs.
Hawes said scrapping ECOS immediately puts the Industrial Strategy’s ambitions in doubt, referring to a government plan unveiled in June to boost vehicle output to 1.3 million units per year.
Even so, the UK government claims that "the measure is not expected to have any significant macroeconomic impacts".
"Private use of a company car is a valuable benefit, and it is right the appropriate tax is paid on it," said a HMRC statement.
"This measure will ensure fairness with other taxpayers, reduce distortions in the tax system, and it reinforces the emissions-based company car tax regime which incentivises the take-up of zero emission vehicles."
