UK car market set to return to 2019 levels by 2026

The UK car market is on track to return to its pre-pandemic size within the next two years, with total transactions expected to reach 9.8 million in 2025 and rise to 10.2 million in 2026, according to new analysis from Autotrader. If realised, the 2026 forecast would match the market’s last peak in 2019, following half a decade of disruption and volatility.

Autotrader said the rebound will be driven largely by continued strength in the used market, which is predicted to grow 3% year-on-year to more than 8.2 million sales in 2026. By contrast, new car registrations are forecast to edge up just 1% next year to 2.035 million, reflecting fierce competition among manufacturers and ongoing regulatory pressures.

Despite a backdrop of high but steady inflation and interest rates, consumer confidence remains robust. Autotrader recorded a record 982.3 million visits to its platform over the past 12 months, equivalent to nearly 2,000 visits per minute, and said 91% of buyers feel as confident, or more confident, about affording their next car as they did a year ago. Three-quarters expect to purchase a vehicle within six months.

However, the company warned that several structural challenges will shape retailers’ fortunes in 2026. Chief among them is sourcing: with around two million new cars not sold during the pandemic, the shortage of younger used stock is increasingly affecting both franchised and independent retailers. Autotrader data shows there will be 1.6 million fewer three- to five-year-old cars available next year compared with 2019, while supply of five- to seven-year-old vehicles is expected to fall 17% year-on-year.

At the same time, the electric vehicle (EV) transition is entering a new phase. Interest in EVs has strengthened, buoyed by the Electric Car Grant and widening model choice, with grant-eligible models now dominating new-EV enquiries. EVs have accounted for around 25% of new car sales in recent months. In the used market, demand continues to outstrip supply, helping stabilise prices and pushing used electric models to sell faster than any other fuel type.

Competition in the new car market is also intensifying. Autotrader reports that 72 brands are now active in the UK – 27 more than in 2019 – with as many as 80 expected by the end of 2026. Brand loyalty is weakening, particularly among EV buyers, where only one in five opts for the same brand again.

Ian Plummer, Autotrader’s chief commercial officer, said the year ahead would be defined by agility and competition.

“2026 is set for growth, but the underlying narrative is one of structural change and intense competition,” he said. “The fact that the UK’s combined new and used car market is on track to finally return to the same size as 2019 is a clear signal of the resilience and fundamental necessity of car ownership for consumers.

“However, this is not easy growth. Success in 2026 will be defined by agility, the ability to adopt a conquest mindset, and leveraging data to accurately target and convert customers in both the increasingly fragmented new car market and an ever more competitive used EV market,” noted Plummer.

“Just as importantly, proactive action is essential: retailers and brands must take tangible steps to optimise sourcing and retention – not only of customers but also of vehicles – maximising the lifetime value of both. Those who prioritise these areas and respond actively to the evolving challenges will be best positioned to thrive in the year ahead.”