Every quarter, we combine our proprietary market insights with the latest car registration data to create three scenarios which forecast the industry’s performance for the next 12 months. These include an upline, baseline and downside scenario, each reflecting different macroeconomic, policy and industry conditions that could shape the outlook for the remainder of the year. Together, these scenarios provide a structured framework to help stakeholders plan for the possibilities that may unfold in the year ahead.
Our baseline scenario, which is most likely, forecasts that we will reach 2,084,477 new car registrations in 2025, representing 5.7% year-on-year growth. This is a modest increase on the forecasts we released earlier this year due to the improved performance seen in Q1 2025. Reflecting a steady, cautious recovery of consumer confidence, this outcome is balanced with ongoing challenges facing manufacturers due to the Zero Emission Vehicle (ZEV) mandate. While the forecast growth is a positive signal for the market, it must be viewed within the broader market context that registrations still lag behind historical norms. If the market achieves this benchmark this year, it will be 9.8% below the 2000-2019 average.
*Actuals
In this optimistic scenario, the UK economy rebounds strongly in the second half of 2025, supported by improving macroeconomic conditions and a more stable automotive market. With a clearer policy landscape and growing consumer financial confidence, the industry benefits from a healthier balance of supply and demand. The continued growth of new market entrants also contributes to a more resilient and profitable market.
The key factors that influence this scenario are:
In our moderate baseline scenario, the UK automotive market remains on a steady path to recovery. The market exceeds the 2 million car registration milestone, supported by cautious confidence from both consumers and businesses. However, ongoing domestic and global economic volatility continues to present challenges that dampen any hopes of rapid growth.
The key factors that influence this scenario are:
In a downside scenario, the UK automotive market faces a stalled rate of recovery. An ongoing lack of clear industrial strategy, slower-than-anticipated interest rate cuts and intensified pressure on manufacturers from emissions regulation deadlines and trade tariffs create a volatile environment for the industry. The market struggles to regain momentum, and registrations remain subdued throughout the year.
The key factors that influence this scenario are:
Reviewing our previous forecasts against the actual total new vehicles registered in Q1 2025, our baseline forecast was 93% accurate. Looking at our monthly forecasts, the January forecast was 100% accurate.