Data published by the SMMT this week shows the UK new car market recorded slight growth in October with a 0.5% uplift. Positive news was seen in the zero-emission vehicle (ZEV) segment, where electric cars accounted for a quarter of new sales, pushing the ZEV tally for this year ahead of the total recorded in the whole of 2024. The overall market remains on course to surpass two million units annually for the first time since 2019.
However, this anticipated growth is now at risk due to proposals to scrap Employee Car Ownership Schemes (ECOS) and the potential introduction of pay-per-mile taxation.
The removal of ECOS would inflict substantial damage on the automotive sector, as it currently supplies around 100,000 new cars a year—approximately 5% of the annual new car market, with an increasing proportion being zero-emission vehicles. SMMT analysis shows the acute consequences would cost UK Automotive some £1 billion, threatening future investment and manufacturing jobs.
Furthermore, ahead of the Autumn Budget, ending ECOS would paradoxically result in a half-billion pound hit to the Treasury in lost VAT and Vehicle Excise Duty receipts. This sum is more than double the Electric Car Grant, which was designed to stimulate sales.
This risk is compounded by the possibility of pay-per-mile taxation for EVs, which the SMMT considers to be “entirely the wrong measure at the wrong time,” undermining manufacturer efforts to reach challenging ZEV Mandate targets.
The SMMT stresses that delivering the UK’s ambition to restore its automotive manufacturing hub requires whole-government alignment on pro-growth policies. The Autumn Budget must provide fiscal measures that allow market growth, address high energy costs, bolster supply chain resilience, and boost investment.
