The last few weeks have provided a vast amount of economic news which will impact the automotive sector, with the Spring Statement followed by the introduction of severe tariffs by the Trump administration and the reinstatement of the 2030 phase-out date for new petrol and diesel cars.
Chancellor Rachel Reeves delivered the Spring Statement on 26 March and while no further changes were introduced that directly impacted the automotive sector following the 2024 Autumn Budget, several updates were provided for policies due to come into effect this month.
The changes that were implemented as of 1st April 2025 mostly involved alterations to road tax (VED). Despite strong pushback from the automotive industry, EVs will no longer be exempt from VED, while hybrid and ICE cars will face significant increases.
Electric cars registered after 1st April 2025 will pay a £10 first-year tax until 2029, while those costing over £40,000 will also attract an additional charge of £425 a year for the “Expensive Car Supplement”. Electric cars registered between 2017 – 31st March 2025 will now pay £195 annually. Electric vans will now be charged £355 a year in VED, the same rate as a petrol or diesel van.
All cars emitting between 1-50g/km of CO2, which accounts for most plug-in hybrids, will have the first-year tax rise to £110, and new cars emitting 51-75g/km of CO2 will see a tax increase from £30 (or £20 for hybrids) to £135.
Benefit in Kind changes
For the Benefit in Kind (BiK) company car tax, the rate remains low for electric vehicles, gradually increasing from 5% to 9% by 2029-2030 to encourage electric vehicle adoption. Rates for hybrid and ICE vehicles will increase from 2028-29.
The major change to BiK is for double cab pick-ups. Those registered after 31st March 2025 are now classed as cars for tax purposes. This could leave owners facing a 236% increase in the tax, with a Ford Ranger costing up to £9,360 more annually. However, those purchased before the deadline will be charged the previous rates.
With ambitious sales targets for EVs – albeit tweaked this week for more flexibility – in place, the changes may impact the adoption of EVs, making them a marginally less attractive proposition.
Petrol and diesel car deadline set
Following a long review about whether to officially end the sale of petrol and diesel cars in 2030 or 2035, the Government has announced this week that it is reinstating the 2030 deadline.
However, manufacturers will now have more flexibility on annual targets and will face lower fines for breaching the rules. It has also said that full and plug-in hybrid vehicles can be sold until 2035, easing the transition away from combustion power. It has also introduced a £2.3 billion investment designed to support both manufacturers and drivers, with targeted support for increased charging infrastructure and fully electric vans, trucks and motorcycles.
The potential effects of USA tariffs
Along with the changes to the phasing out of combustion engine cars and the Spring Statement, April sees the introduction of Donald Trump's tariffs. While predominantly affecting those exporting into the USA, the severity of the tariffs will have far-reaching effects globally.
As well as the general turbulence it will cause to markets across the world, UK vehicle manufacturers are expected to scale back production volumes if exports into the USA decline. The reduced supply and decrease in global sales could also result in an increase in vehicle retail prices in the UK and Europe, impacting private buyers and fleets.
The introduction of VED tax for electric vehicles also adds costs for buyers who have made the switch to electric ahead of the 2030 ban on new petrol and diesel vehicles, while the reclassification of pick-ups also brings unexpected cost increases.
The tariffs implemented to date by the USA will no doubt bring some unpredictable cost increases across the automotive industry, including further impacts on private buyers and businesses that rely on fleets.
A consistent approach in uncertain times
Despite various market forces potentially causing vehicle purchase price and maintenance costs to increase, Motor Assist continues to improve efficiency to minimise the cost to businesses when drivers are involved in an incident.
With its network of manufacturer approved bodyshops ensuring that vehicle repairs are as cost-effective and efficient as possible, Motor Assist always aims to reduce vehicle downtime.
With a suite of technology to support its accident management services, it ensures that the correct repair method is chosen first time, further helping to reduce average claim duration and costs.
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