The UK new car market will see 8.6% year-on-year growth in 2026, according to the latest forecast published by Cox Automotive.
However, the data company said much of this growth was being driven by tactical activity rather than underlying consumer demand, and argued that its forecast still being 5.1% below the 2000-2019 average highlighted continued market fragility.
Cox Automotive said its full-year forecast of 2,193,547 registrations followed a ‘robust’ second quarter, during which more than 530,000 new cars were registered.
It said this Q2 figure represented 13.3% year-on-year growth, driven by fleet demand, manufacturer incentives and a “rapidly changing competitive landscape”.
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Cos Automotive said growing competition from new entrants, rising inventory levels, logistics pressures and continued affordability concerns were creating increasingly challenging market conditions. It highlighted an increased focus by Chinese manufacturers on Europe, and rising energy and logistics costs.
Alongside its core prediction, Cox Automotive has published an upside forecast of 2,339,005 registrations, which would be a 15.8% year-on-year increase and the first time this decade that the market would exceed the historic average. On the other hand, it said prolonged political uncertainty, continued inflationary pressure and weaker consumer confidence could see its downside forecast of 1,996,174 registrations, which would be a 1.2% year-on-year decline, being realised.
Genuine market growth difficult to identify
Philip Nothard, insight director at Cox Automotive Europe, said: “The UK new car market continues to perform strongly on paper, but the reality is more nuanced. Registrations are rising, yet much of that growth remains heavily dependent on incentives, fleet activity and the expansion of new market entrants rather than organic consumer demand.
“Competition across the industry is now at unprecedented levels. New brands are reshaping buyer expectations around pricing and value, while challenging established manufacturers to adapt more quickly than ever before.
“Perhaps the biggest challenge facing the industry is distinguishing genuine market growth from volume supported by tactical activity. As manufacturers continue to balance regulatory requirements, inventory management and competitive pressure, the risk of creating oversupply in the nearly-new market becomes increasingly significant.
“Success in this environment will be determined by disciplined stock management, pricing strategy and the ability to react quickly to changing market conditions. Growth remains achievable, but businesses should be careful not to mistake short-term momentum for long-term market stability.”