The Outlook to 2026 – Motor Retailing Set to Defy Negativity

• Business confidence drops to post-pandemic lows after Budget – Institute of Directors 
• Tax hikes threaten UK investment growth - Susan Langley, Lady Mayor of the City of London 

While it might be difficult to ignore the negative media sentiment about the UK economy at the moment, there is good reason to do so for motor retailing, at least on a modest basis.  

The Rationale for Some Optimism 

In looking ahead to 2026, I read a line in a report by marketing research firm NIQ that really resonated with my thinking when it comes to motor retailing in the year ahead. 

"Consumers are numb to volatility—confidence is misleading. Shoppers have adapted to constant shocks, which makes them feel more confident even though their financial realities haven’t changed. Inflation, everyday expenses, and borrowing costs still squeeze wallets, making volatility a semi-permanent condition leaders must plan around.” 

Now, couple this view with the OECD’s post-Budget benchmarking for the UK economy stating: 

The UK is set to be the second-fastest growing economy in the G7 this year, behind the US, and the third fastest in 2026 when it is overtaken by Canada, according to the OECD. 

The 2026 Outlook for Car Sales 

The forecasts are for steady growth. 

New Cars and Vans (SMMT October, ahead of the Budget) 

• The car market is expected to rise by 1% to 2.032 million units – sales of new EVs will continue to increase their market share, while petrol and diesel sales will decline by 12.7% and 15.8% respectively 
• The LCV market is anticipated to grow 4.2% to 335,000 units 

The Used Market – (Autotrader, December 1st) 

• The used car market will grow 3% year-on-year (YoY) to reach circa 8m sales in 2026, continuing its progressive recovery since 2022. 

Defying the Sceptics 

As I noted earlier, I share NIQ’s view that consumers have largely come to terms with the semi-permanent volatility we see all around us. This is not just a personal view, according to Autotrader research, motor spending is viewed as a necessity by nine in ten people. 

The other element to bear in mind is that two of the main economic levers, inflation and interest rates, look set to fall in 2026, which can only help customers’ spending ability. 

• Inflation: The average forecast among economists surveyed by the Treasury in November 2025 was 3.5% for Q4 2025 and 2.3% for Q4 2026. KPMG has been more optimistic, suggesting in December that it expects inflation to return to its 2% target by April 2026. 
• Interest Rates: The Bank of England is expected to cut interest rates before Christmas, reducing them from their current 4%, according to financial forecasts. It is suggested that rates may drop again in the first half of next year. Afterwards, there could be one more cut to 3.25 per cent by the end of 2026. However, the general consensus at present is that interest rates are unlikely to fall any further. 

The Year Within our Business  

As I look back at how these external factors have influenced our year at AutoProtect Group, I’m proud to say that we’ve handled the headwinds with resilience, coming out the other side with a strong Year on Year performance. We have a lot of exciting conversations introducing more potential partners to AutoProtect that I’m excited to pursue next year.  

2025 has been the year of preparation for greater things. Every corner of our business has been undergoing a complete business transformation to futureproof our offering for the years to come. Watch this space for more detail on that in Q1 next year.  

That being said, we’re ending Q4 in a strong position. The reintroduction of GAP insurance, a more focussed, rationalised product suite and key client wins all add to our reasons for optimism. As it should be with any partnership approach, our success is evidence of our dealer partners’ success and I’m proud to see our hard work pay off for all stakeholders in our distribution chain.  

Some Final Thoughts 

The UK car landscape is changing, with the shift to EVs and a large number of new entrants resulting in a noticeable change in the established dynamics. This may see a shift in brand loyalty. 

Used-car stocking – sourcing used stock is likely to be a challenge again in the year ahead, as consumer demand remains strong. Many experienced trade buyers will see the sweet spot for stock remain changeable as the number of EVs rises whilst IC model availability declines. 

The F&I landscape – the FCA’s motor finance redress scheme will hopefully be resolved in the coming months. Still, for retailers, a key focus should be on delivering the Consumer Duty, which is the FCA’s published priority. At AutoProtect, we are geared up to help our dealer partners with exactly this. 

And so to close, from all the team across AutoProtect Group, our very best wishes for success in 2026.