Manufacturing Outlook 2026: What It Means for Equipment Values

As we move into 2026, the UK manufacturing sector remains in a period of adjustment rather than recovery. Recent data, including insights from Allianz and wider industry reporting, paints a picture of continued pressure: output has softened, demand remains uneven, and certain sectors are still grappling with structural challenges.

For manufacturers, lenders, and asset-backed businesses alike, these conditions have important implications for the value of plant and machinery. At Hickman Shearer, we are seeing first-hand how economic trends, sector performance, and operational resilience are feeding directly into valuation outcomes.

A challenging manufacturing backdrop

Through the latter part of 2025, UK manufacturing activity remained subdued. Official figures and business surveys consistently showed declining output through mid-year, with weakness persisting into winter. While some subsectors demonstrated pockets of resilience, overall confidence remained cautious.

The automotive industry has been a particular point of concern. Vehicle production fell further, with commercial vehicles experiencing the sharpest decline. For exporters, the introduction of new US tariffs added another layer of complexity, increasing costs and uncertainty for manufacturers already managing tight margins.

Alongside demand challenges, long-standing skills shortages continued to weigh heavily on the sector. Around 46,000 manufacturing vacancies remain unfilled, constraining productivity and limiting the pace at which businesses can adapt or scale. At the same time, cyber risk has moved firmly up the agenda. The high-profile cyberattack on Jaguar Land Rover served as a stark reminder of how quickly operational disruption can cascade through complex supply chains.

Material costs also proved unpredictable. Prices for key metals such as aluminium and copper fluctuated throughout 2025, directly affecting decisions around equipment maintenance, refurbishment, and replacement. In this environment, capital expenditure has often been delayed or reassessed, with knock-on effects for the secondary market.

How these trends affect equipment values

From a valuation perspective, these developments are not abstract. They directly influence buyer behaviour, asset liquidity, and achievable sale values in both orderly and distressed scenarios.

Sector-linked assets under pressure
Where machinery is closely tied to underperforming sectors, values can soften. Model-specific automotive production lines, bespoke tooling, and highly specialised equipment may attract fewer bidders, particularly if future demand is uncertain or if reconfiguration costs are high. Buyers are increasingly selective, factoring in not just current utility but the ease with which assets can be redeployed.

Flexibility remains a key value driver
In contrast, adaptable equipment continues to hold its ground. General-purpose CNC machinery, automation systems, and production assets capable of supporting multiple outputs are in demand. With skills shortages persisting, manufacturers are prioritising equipment that improves productivity whilst reducing reliance on scarce specialist labour. This flexibility translates into stronger residual values and wider buyer appeal.

Condition, maintenance, and resilience matter more than ever
In a cautious market, buyers place increased emphasis on reliability. Clear service histories, evidence of proactive maintenance, and up-to-date control systems all support valuation strength. Where relevant, cyber resilience is now part of the conversation. Equipment integrated with digital systems or networked controls is expected to meet higher standards of security, and deficiencies can negatively affect buyer confidence.

Replacement costs influence the secondary market
Volatile material prices and long lead times for new equipment continue to underpin demand for quality used assets. Where new machinery is expensive or slow to procure, well-maintained second-hand equipment can command more stable pricing, provided it meets current operational requirements.

The valuation outlook for 2026

Short-term expectations
In the near term, we anticipate cautious pricing for highly specialised machinery in sectors facing weaker demand. Assets that are difficult to repurpose or upgrade may require discounting to achieve a sale, particularly in forced or time-sensitive scenarios. Realistic expectations and clear market exposure will be key.

Medium-term considerations
Looking further ahead, there are reasons for measured optimism. As supply chains stabilise and investment confidence gradually improves, adaptable and well-presented assets should see more consistent demand. Where businesses have invested in maintaining and upgrading equipment rather than deferring spend entirely, those assets are likely to perform better in valuation terms.

For lenders, insolvency practitioners, and corporate asset owners, this reinforces the importance of regular, informed valuations. Understanding how macro trends intersect with asset-specific factors allows for better decision-making, whether that is refinancing, restructuring, sale planning, or capital investment.

Final thoughts

The manufacturing outlook for 2026 is one of careful navigation rather than rapid growth. In this environment, equipment values are increasingly shaped by flexibility, resilience, and real-world usability. At Hickman Shearer, our role is to interpret these market dynamics and provide clear, evidence-based valuations that reflect both current conditions and realistic market behaviour.

As uncertainty continues to define parts of the manufacturing landscape, informed valuation has never been more important.

About Hickman Shearer

At Hickman Shearer, we specialise in delivering exceptional RICS and ASA certified capital asset valuation, management, and sales services. Our expertise span a wide range of global industries, ensuring that we provide tailored and insightful commercial valuations and equipment valuation services to meet your unique needs. With a strong track record of delivering robust and independent advice, we are committed to supporting businesses in achieving their strategic objectives.

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