How the Autumn Budget 2025 Will Impact the UK Automotive Market — And Why Used Cars Could Be the Big Winners –

The Chancellor’s Autumn Budget 2025 delivered some of the most significant motoring-related announcements in recent years, setting the direction of travel for how the UK will tax, incentivise, and regulate vehicles over the next decade. While much of the focus has been on electric vehicles (EVs) and the new taxation model, the impacts will ripple into the wider automotive sector — particularly the used-car market, which continues to be the most resilient part of the industry.

For everyday motorists, dealers, and auction buyers, the Budget raises key questions: Will used-car prices go up or down? Will EVs become more or less attractive? And how will changing tax structures shape buyer behaviour?

Below, we break down the headline measures and explain what they mean — especially if you’re considering buying a used car or using an auction-buying service like Car Auction Buying Service Limited (CABS).

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1. The Big Change: Pay-Per-Mile Taxation for EVs and PHEVs

The Government confirmed a seismic shift: from 2028, electric vehicles will be subject to a per-mile road-use tax.

• EVs: 3p per mile

• PHEVs: 1.5p per mile

This is the clearest signal yet that the “tax-free EV era” is coming to an end. The government argues this levels the playing field as fuel duty revenues fall, but for many buyers — particularly cost-conscious families — it introduces uncertainty around future running costs.

Impact on the used-car market

• Buyers sitting on the fence may pause EV purchases, particularly newer models that depreciate more quickly.

• Demand may shift back toward economical petrol and diesel cars, especially low-mileage, well-maintained models.

• Older EVs — especially 3–6-year-old examples — may actually become more attractive if prices fall and real-world running costs remain lower than equivalent ICE cars.

For CABS customers, this means there may be opportunities to secure EVs significantly below retail value as the market reacts.

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2. Fuel Duty Freeze Continues — But Pressure Is Building

The Budget confirmed that fuel duty will remain frozen until September 2026, offering short-term relief to drivers.

This is good news for owners of petrol and diesel vehicles. But very few expect the freeze to last beyond next year. Treasury pressure is increasing, and the gradual shift to EVs is squeezing revenue.

Impact on used cars

• Demand for fuel-efficient petrol models (e.g., Ford Focus EcoBoost, Toyota Yaris, VW Polo TSI) is likely to stay strong.

• Diesel remains desirable for high-mileage drivers, despite years of negative press. Expect continued interest in models such as the BMW 3 Series, Mercedes C-Class, and Kia Sportage diesels.

• With no immediate tax rise, many buyers will delay switching to EVs, keeping used ICE demand buoyant.

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3. EV Incentives Extended — But Won’t Offset the New Tax System

The Budget also extended funding for EV incentives and infrastructure:

• Additional grants for businesses transitioning fleets

• More funding for rapid-charging points

• Continued support for battery manufacturing

This is positive for long-term EV adoption, but for consumers buying today, the looming mileage tax may outweigh the benefit of new incentives.

Impact on used cars

• Expect a two-tier EV market to emerge:

  • Newer EVs: still pricey, depreciating faster

  • Older EVs: better value, especially 2019–2023 models

• Fleet EVs defleeting over the next 12–24 months will increase supply at auctions — pushing prices down.

Buyers using CABS could benefit enormously, as auction EV prices may soften while retail forecourts remain overpriced.

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4. Employee Car Ownership Scheme (ECOS) Reform Delayed Until 2030

One overlooked Budget detail: changes to ECOS rules won’t come until 2030.

This means company cars and salary-sacrifice vehicles — especially EVs — will continue to flow into the used market at predictable intervals.

Impact on used cars

• The supply of high-quality, low-mileage, 2–4-year-old vehicles will remain stable.

• Popular ex-fleet models such as Ford Puma, Kia Niro, BMW 330e, Tesla Model 3, VW ID.3, and Mercedes A-Class will continue to dominate auctions.

• Used-car buyers will benefit from consistently strong choice in the most in-demand segments.

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5. Market Reaction: Used Cars Remain the Most Stable Part of the Industry

Even before the Autumn budget 2025, the used-car market was showing impressive resilience:

• Auto Trader reports steady demand across all fuel types.

• Retail prices have stabilised after the turbulence of 2021–2023.

• Buyers are gravitating toward value, not brand-new models with heavy depreciation.

What this means in practice

Many motorists simply want:

• predictable running costs

• good reliability

• strong value

• and a fair price

The Budget did nothing to change that — if anything, it reinforced it.

Used cars remain the safest financial choice for 90% of buyers.

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6. What This Means for Buyers in 2025–2026

a) Petrol & Diesel Cars

Still in high demand, still sensible, still holding value well.
Expect continued stability and strong resale values.

b) Electric Vehicles

Short-term uncertainty → potential price drops
Medium-term → more choice at auction
Long-term → EVs remain the future, but the market will rebalance

c) Hybrids & Plug-In Hybrids (PHEVs)

A sensible compromise as buyers weigh EV running costs.
Expect sustained demand, especially for premium brands.

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7. What This Means for the Auction Sector — and Why CABS Is Well Positioned

Auction buying remains the smartest way to secure value in a market shaped by taxation and political change.

Here’s why:

1. Retail prices take longer to adjust

Dealerships are slow to react to Budget shockwaves.
Auctions adjust instantly — meaning below-market opportunities appear sooner.

2. EV volatility = bigger bargains

If EV demand dips, auctions will show the price correction before forecourts do.

3. Fleet defleets remain strong

Thousands of 1–4-year-old cars enter BCA and Manheim weekly.
CABS gives buyers access to vehicles that the public cannot buy directly.

4. Buyers need expert guidance more than ever

Changing taxes, changing incentives, changing demand…
The old pattern of “just buy what the dealer has” no longer works.

CABS helps buyers:

• navigate auction grading

• interpret CAP values

• compare running costs

• assess true market value

• avoid overpaying on forecourt cars

• secure thousands in savings

In a more complex market, expert auction sourcing becomes even more valuable.

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Conclusion: A Budget That Creates Uncertainty — but Also Opportunity

The Budget 2025 marks a turning point:

• EVs will be taxed on usage

• Petrol/diesel cars remain stable

• Incentives continue

• Fleet supply remains predictable

• Used cars continue to dominate the value conversation

For everyday buyers, the Budget adds complexity.
For the used-car sector — and especially for CABS — it creates opportunity.

Auction buying remains the most efficient, transparent, and cost-effective way to secure a vehicle in a shifting market.

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