The UK''s automotive trade association, the Society of Motor Manufacturers and Traders (SMMT), is warning of rising UK supply chain insolvencies and the need for ‘urgent action needed to save critical auto suppliers’.
A new report, ‘From supply chain risk to industrial growth’ commissioned by the SMMT, highlights the adverse impact of high UK costs and lower demand. It also says that programme uncertainty is weakening the businesses underpinning UK vehicle manufacturing, threatening existing capability and future growth.
The study found that unpredictable demand and high UK labour and energy costs are squeezing cash flow and investment in equipment, skills and productivity. Some suppliers reported operating at around half capacity in parts of their businesses, raising the cost of every component and weakening competitiveness. Insolvencies among UK vehicle and component manufacturers rose by approximately 180% between 2016 and 2025, against around 63% across all UK businesses, according to the report.
SMMT is therefore calling for a national ‘Automotive Productivity Accelerator’, building on DRIVE35-funded Supplier Readiness and Transformation pilots in the West Midlands and North East. It would provide GBP100 million in capital grants for productivity, automation, robotics, AI and digitalisation, and GBP25 million for skills.
The SMMT also said DRIVE35 should be extended to components used in all powertrains, such as plastic mouldings and steel pressings. Dedicated tooling finance would ease upfront costs for new vehicle programmes, while a GBP5 million match-funded Auto to Aerospace and Defence Readiness Programme would support diversification, helping to retain skills and sovereign industrial capability.
The SMMT points out that with more than 2,500 automotive supply chain businesses and 188,000 jobs across the industrial base, the stakes are high. Protecting viable suppliers now will preserve critical capability needed to compete for future business – and ensure Britain retains more value from every vehicle it builds.
Mike Hawes, SMMT Chief Executive, said: “Britain cannot afford to lose the suppliers that make vehicle manufacturing here possible. Once their skills, tooling and expertise are gone, investment becomes harder to win – and far harder to bring back. The opportunity to reshore component spending in Britain is real, but we cannot take it for granted. Industry must improve productivity and work to secure critical capability, matched by government action on energy costs, market access and targeted investment support. Backing suppliers is not just about protecting today’s jobs, it is about securing Britain’s place in the next generation of vehicle manufacturing.”
