UK made fewer vehicles for the fifth straight month in May as tariffs bite

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(Reuters) -Britain’s vehicle production declined from a year ago for the fifth successive month in May, industry data showed on Friday, as factory disruptions and U.S. tariffs weighed on automakers.

UK car and commercial vehicle production dropped 32.8% from a year ago to 49,810 units last month, marking the worst percentage drop in May output since 1949, excluding the COVID-19 pandemic-hit 2020, according to data from the Society of Motor Manufacturers and Traders.

Exports to the UK’s two biggest markets, the EU and the U.S., declined by 22.5% and 55.4% respectively, SMMT said.

U.S. President Donald Trump’s 25% tariffs on imported automobiles and parts, imposed in March, have disrupted global supply chains, added hundreds of millions of dollars in costs for manufacturers, prompted export suspensions and pushed several automakers, especially in Europe, to consider shifting production to the U.S. to avoid the duties.

British manufacturing also contracted in May, as output, orders and employment declined.

Still, SMMT chief Mike Hawes said the UK’s trade deals, especially with the U.S., and a more positive relationship with the EU, provided some optimism.

The U.S. and UK reaffirmed a previously agreed trade deal during the G7 summit in Canada earlier this month, under which up to 100,000 UK-made cars a year can enter the U.S. at a 10% tariff, lower than the 25% rates other countries face.

In May, Britain reached a trade deal with India to lower tariffs and set quotas on auto imports, while also moving closer to the European Union on cooperation in defence, energy and agriculture.

Car production, excluding commercial vehicles, dropped by 31.5% in May, largely driven by model changeovers, restructuring and the impact of U.S. tariffs, SMMT said.

(Reporting by DhanushVignesh Babu in Bengaluru; Editing by Sahal Muhammed)