UK car manufacturing fell for the first time in eight years last year as the industry said it was in urgent need of clarity on Brexit transitional arrangements.
In 2017, 1.67m vehicles rolled off production lines, three per cent fewer than the previous year, according to data to be published today by the Society of Motor Manufacturers and Traders (SMMT).
The overall drop was driven by a 9.8 per cent fall in output for the domestic market in response to declining business and economic confidence and confusion over the government's policy on diesel.
Exports also declined, but at a much lower rate, having fallen by 1.1 per cent. Overseas demand accounted for nearly 80 per cent of all UK car output, the highest proportion for five years.
The EU was the UK's biggest trading partner, taking more than half of all exports, while demand rose in several key countries, including Japan (up 25.4 per cent), China (up 19.7 per cent) and Canada (up 19.5 per cent). Demand for British-built cars in the US fell by seven per cent.
The SMMT said the figures highlighted the importance of government and industry working together to ensure better conditions for the sector.
Recent figures also showed the number of UK car firms experiencing significant financial distress was on the rise after the SMMT earlier in the month said new car sales had fallen by 5.7 per cent last year.
Mike Hawes, SMMT chief executive, said the sector "urgently" needs clarity on the transitional arrangements for Brexit, which he said must retain all the current benefits or else risk losing 10 per cent of the sector’s exports overnight.
Hawes said: "We compete in a global race to produce the best cars and must continue to attract investment to remain competitive. Whilst such investment is often cyclical, the evidence is that it is now stalling so we need rapid progress on trade discussions to safeguard jobs and stimulate future growth.”