UK car production increased by 2.7% year-on-year in May, putting an end to a streak of four consecutive monthly declines, according to data released on Thursday.

The automotive trade body cautioned, however, that high energy costs, trade risks, and weak demand for electric vehicles continue to pose threats to the sector's competitiveness.

"Manufacturers are investing billions in zero-emission technology, but weak underlying demand and rising compliance costs are endangering competitiveness, jobs, and future investment," stated the chief executive of the trade association.

The data shows that UK vehicle production rose to 51,178 units in May. Within this total, passenger car output increased by 3.2% to 49,249 units, while commercial vehicle production fell by 7.6% to 1,929 units.

Exports of UK-built cars to the United States surged by 83.1% last month. In contrast, exports to the European Union and China declined by 5.2% and 14.3%, respectively.

Cumulative production for the first five months of the year stands at 317,779 vehicles, representing a decrease of 8.7%.

The trade association issued a warning that the EU's 'Made in the EU' proposals, along with stricter rules of origin set to take effect in 2027 under the post-Brexit trade deal, could restrict access for UK-made cars to the EU market. Furthermore, conflict in the Middle East has the potential to drive energy costs even higher.