Car market ‘will fail to reach pre-pandemic levels in 2026’

Car sales in the UK will remain below pre-coronavirus levels next year as demand for new units will be “broadly flat”, according to a forecast.

Online vehicle marketplace Autotrader predicted that 2.0 million new cars will be purchased in 2026, while 8.0 million used cars will change hands.

This would represent growth of about 1% and 3% respectively compared with this year, but remain 2% down on the total of 10.2 million in 2019, before the virus crisis.

Weak demand from private buyers for new cars was attributed by Autotrader to the combination of “high prices and the ongoing cost-of-living pressures”.

The company said uptake of electric cars will be maintained by purchases for fleets owned or leased by businesses or other organisations, and the continuation of Government grants of up to £3,750.

Autotrader added that the used car market is “typically insulated” from wider economic turbulence because car ownership “remains essential” for many people.

Ian Plummer, the company’s chief commercial officer, said: “The UK car market has shown resilience, and we expect it to grow again in 2026 and even to get back to around 10 million overall transactions, a level last seen in 2019.

“But it has been a long road back from the levels we saw pre-Covid as supply disruption continues to constrain an otherwise relatively healthy used car market.

“To unlock sustained market growth, we’d like to see clearer Government incentives that support affordability, coupled with policies that reinforce consumer confidence in the transition to electric vehicles – from targeted purchase support to long-term certainty on EV taxation and infrastructure, such as cutting VAT on public charging and even subsidising its cost.”

Autotrader said there will be 17% fewer five to seven-year-old used cars in the market next year compared with 2019 because of the “missing” cars not built during coronavirus restrictions.

It added that obtaining used cars in that age category will become “increasingly challenging” for retailers.