Are low car sales turning the UK into Cuba?
The UK is at risk of turning into Cuba. Famous for its vintage 1950s American cars, Cuba is the home of slab sides, high wings, and lots of chrome. Might the UK be going the same way, albeit with less flare and panache? Our government and regulators have conspired to undermine new car sales, leading to rapid ageing of the UK “Motorparc”. According to data from the European Automobile Manufacturers Association, the average age of a car is now over 10 years, the highest since records began 25 years ago.
Whatever you think of Rachel Reeves’ budget, perhaps one mistake she made was waiting three months before actually delivering it. The wait was valuable for tax planning lawyers and accountants, but the inevitable uncertainty was terrible for both business and consumer confidence, as we all waited for swinging tax increases.
Confidence is important because without it we are not going to make those “big ticket” decisions to move house or buy a new car or a washing machine. If consumers are unhappy, they will make do with what they have, hanging onto their cash or skipping that lease plan. Nowhere is this more true than in UK private car sales figures, plotted below alongside the Consumer Confidence Survey from market researcher GfK. Car sales and consumer confidence peaked around 2015/16, and have drifted backwards ever since. There seems to be a clear relationship between confidence and the big-ticket purchase of a car.
Source: Pantheon Economics 5/2/2025.
It is not just the delayed budget that hurt confidence and car sales. Car prices have soared at a time when there is continued uncertainty surrounding the phasing out of fossil fuel cars. To add to this uncertainty, the UK regulators have gone after many of the firms that provide car purchase finance, restricting credit in the sector. Given that most private purchases use car finance plans, any restriction in credit has a direct effect.
The weakness in car sales has fed through to UK car production, which has fallen from around 1.6m cars in 2018 to about 800,000 cars today, with all the knock-on impact that has on the supply chain. This is a huge drop in a source of wealth creation for the country, and it comes at a time when the economy is crying out for growth. Unfortunately, government action in one form or another seems maximally designed to undermine the car industry.
The list of best-selling cars so far this year is instructive. They are nearly all imports with the exception of the Nissan Qashqai, assembled in Sunderland. There is also a sense of foreboding in this list, as two Chinese cars make it in at 9 and 10; the MG HS and MG ZS. Chinese car exports are shooting up as Chinese companies excel at low-cost hybrid and electric vehicles. The Chinese seem poised to grab market share when this country eventually completes the transition to electric vehicles.
- Kia Sportage
- Nissan Qashqai
- Vauxhall Corsa
- Volkswagen Golf
- Peugeot 3008
- Peugeot 2008
- Ford Puma
- Nissan Juke
- MG HS
- MG ZS
Source: SMMT January New Car Sales
It is 10 years since the high in car sales and, for the last five years, sales have been bouncing along the bottom, never really recovering from COVID. All this has meant that the average age of the motorparc in the UK has risen markedly, and that second hand car values have held up better than they otherwise might have. This is good news if you own a second-hand car auction website, but to most it is the wispiest of silver linings. Business confidence and consumer confidence are an important aspect of future demand in the economy. The UK government and UK regulators need to think more carefully about how their actions impact that confidence. Here we have focused on car sales, but all forms of investment are important for growth. If the authorities ignore confidence we could end up with an aged motorparc like Cuba, but instead of driving classic American cars we will be driving old Vauxhall Corsas, VW Golfs and old Ford Focuses. The Cubans like to party, but the only fiesta the UK will have is a used Ford.
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