Car supplier insolvencies rose 180% since 2016 and the SMMT wants £130m for productivity

Insolvencies among UK vehicle and component manufacturers rose by approximately 180% between 2016 and 2025, against about 63% across all UK businesses, according to a report published today by the Society of Motor Manufacturers and Traders. The same report identifies £6.4bn a year of manufacturer spending on priority components that UK suppliers could compete for by 2030, and warns that the businesses able to bid for that work are closing before the orders are placed.

What the report says

The report, From Supply Chain Risk to Industrial Growth, combines anonymised sourcing data from vehicle manufacturers with interviews and workshops involving 26 suppliers representing £1.2bn in turnover and 8,500 employees. Manufacturer data came through the SMMT's Chief Procurement Officer Forum, which the trade body says represents 99% of UK-based passenger car manufacturing.

The £6.4bn is expected annual spending in 2030 on components classed as critical or important for UK supply. It includes sourcing that already happens here, so it is not £6.4bn of new work. The SMMT says future orders depend on vehicle programmes, market conditions and whether UK suppliers can compete on price.

The base is wider than the assembly plants suggest. The SMMT counts more than 2,500 automotive supply chain businesses and 188,000 jobs across the industrial base.

Half capacity in parts of the business

Some suppliers reported operating at around half capacity in parts of their businesses. That matters because much of the work is just-in-time and in assembly-line order: seats, cockpit modules, plastic trim, pressings and castings. The report's arithmetic is that the same fixed costs spread over fewer parts raise the cost of every component and weaken competitiveness.

The volume backdrop is flat rather than collapsing. UK factories built more than 717,000 cars in 2025, and 543,682 in the first nine months of 2026, 0.1% more than the same period last year (SMMT car manufacturing data). Exports took 76.7% of output in that period, which leaves the supply base exposed to trade terms it does not set.

The insolvency comparison

The 180% figure covers vehicle and component manufacturers classified under SIC 29, measured between 2016 and 2025. It is set against about 63% across all UK businesses. Unpredictable demand, UK labour costs and energy costs are squeezing cash flow and limiting investment in equipment, skills and productivity, and the SMMT says the pressure falls on makers of parts used across all powertrains.

The recent record gives that argument force. Jaguar Land Rover's production lines were shut by a cyber incident in 2025, an outage that stopped orders at suppliers (our account of JLR's year).

What the SMMT wants

The ask is a national Automotive Productivity Accelerator, built on DRIVE35-funded Supplier Readiness and Transformation pilots already running in the West Midlands and the North East. It would carry £100m in capital grants for productivity, automation, robotics, AI and digitalisation, plus £25m for skills, for a total of £130m. Dedicated tooling finance would ease upfront costs for new vehicle programmes, and a £5m match-funded Auto to Aerospace and Defence Readiness Programme would help suppliers diversify.

The £130m package is set against £6.4bn of annual component spending the report expects to be available in 2030. The SMMT also wants action on energy, employment and business rates costs, and for suppliers to benefit from the new Supply Chain Centre and Industrial Strategy zone incentives.

Not only an electric car problem

The pressure described in the report covers parts used on every powertrain. Seats, cockpit modules, plastic trim, pressings and castings go into petrol, diesel, hybrid and electric cars alike, and the SMMT says DRIVE35 should be extended to components used across all powertrains, naming plastic mouldings and steel pressings.

Mike Hawes, the SMMT's chief executive, framed the choice in industrial terms. "Britain cannot afford to lose the suppliers that make vehicle manufacturing here possible," he said. "The opportunity to reshore component spending in Britain is real, but we cannot take it for granted."

The policy it hangs on

The report ties supplier investment to demand certainty, and demand certainty currently runs through the ZEV mandate review. The consultation opened on 14 August and closed on 23 October, and the government is analysing the responses (GOV.UK). Battery electric cars took 26.6% of registrations in the first ten months against a 33% target for the year, with the SMMT forecasting 27.2% (SMMT, 5 November). The arguments on both sides are set out in our look at the review and in the industry's case.

Trade terms are the other half. The report asks for full UK participation in the EU's "Made in Europe" industrial policy and changes to UK-EU rules of origin to protect tariff-free trade. Both sit with government rather than with the industry, and both affect whether the next model programme is awarded to a UK plant or to one inside the customs union.

What it means for a buyer

The report does not put a price on what a smaller supply base costs motorists. Two channels are visible in its numbers. A supplier running at half capacity spreads fixed costs over fewer parts, which the SMMT says raises the cost of every component, and component cost feeds into build cost and then into prices. The second is availability: parts made by a failed supplier have to be resourced, and resourcing takes time.

The more direct consequence is about which cars are built here. Manufacturers choose where to place each major programme, and a programme placed abroad typically stays there for its production life. The report's warning is that decisions taken in the next year or two will settle that question before the £6.4bn of 2030 spending is awarded.

Sources

Society of Motor Manufacturers and Traders, "Urgent action needed to save critical auto suppliers else reindustrialisation at risk", 12 November 2026, SMMT
Society of Motor Manufacturers and Traders, "From Supply Chain Risk to Industrial Growth", report, 12 November 2026, PDF
Society of Motor Manufacturers and Traders, "UK car manufacturing data", September 2026 figures, SMMT
Society of Motor Manufacturers and Traders, "Year-end push lifts EV sales but Mandate gap set to widen", 5 November 2026, SMMT
Department for Transport, "Zero emission vehicle mandate review", consultation closed 23 October 2026, GOV.UK
Motor Trader, "Industry risks losing suppliers before they can secure business, SMMT warns", 12 November 2026, Motor Trader