UK new car market expected to grow by 8.6%

New car registrations in the UK are expected to reach almost 2.2 million (2,193,547) units in 2026 – an 8.6% year-on-year increase – according to Cox Automotive’s latest new car forecast.

However, Cox warns that, despite the growth, volumes would still remain 5.1% below the long-term average recorded between 2000 and 2019.  

The positive outlook follows a robust second quarter, during which more than 523,000 new cars were registered in the UK, up 13.3% compared to the same period last year.

Growth, says Cox, has been driven by fleet demand, manufacturer incentives and a rapidly changing competitive landscape.

The UK market’s 13.3% growth in June accounted for 61,358 additional vehicles registered. In the same period, 10 of the UK’s newest brands registered over 36,000 vehicles, which accounts for 60% of that total growth. 

But, while registrations continue to rise, much of the current momentum is being supported by tactical activity rather than a significant strengthening of underlying consumer demand, according to Cox.

Growing competition from new entrants, rising inventory levels, logistics pressures and continued affordability concerns are creating increasingly challenging market conditions.  

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Philip Nothard, insight director at Cox Automotive Europe, explained: “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.” 

Global influence on UK market

Global developments are also shaping conditions in the UK, says Cox. China produced 34.5 million vehicles in 2025, which accounts for 42.6% of total global passenger car production, which stood at 71.3 million, while operating at only around 55% capacity utilisation.

Combined with continued restrictions on access to the US market, this is driving an increased focus on Europe among Chinese manufacturers, intensifying competition and pricing pressure across the region.  

At the same time, rising energy and logistics costs continue to impact the sector. Oil prices remain 47% higher and freight rates 41% higher than prior to the Iran conflict, contributing to elevated costs across production and supply chains.  

Looking ahead, Cox Automotive’s upside scenario forecasts registrations reaching 2,339,005 units, a 15.8% increase year on year and the first time this decade the market would exceed the historic average.

Conversely, a downside scenario driven by prolonged political uncertainty, continued inflationary pressure and weaker consumer confidence could see registrations fall to 1,996,174 units, representing a 1.2% decline.  

Nothard said: “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.” 

Cox Automotive’s Insight Quarterly Q2 2026 is available now and includes detailed forecasts for the new and used car markets, alongside analysis of the factors shaping the automotive sector over the coming year.