As the UK automotive sector moves into 2026, the picture is one of continued, albeit modest, growth driven by the used car market, alongside significant structural changes that will impact sourcing and finance. At Marsh Finance, we believe that understanding these trends is vital for our dealer partners to successfully navigate the year ahead.
Here’s our breakdown of the key forecasts and insights for 2026.
The Used Car Market: Volume Growth on the Horizon
The used car sector remains the engine of the market, typically insulated from the wider macroeconomic pressures. The forecast for 2026 is strong:
- Growing Volumes: Used car sales volumes are expected to increase to 8.0 million, marking a +3% rise compared to 2025.
- The Fleet Effect: This anticipated uplift is largely attributed to a replenishment of supply in younger age cohorts. We expect a return of vehicles to the market that were initially registered during notable jumps in certain fleet channels back in 2023.
- Finance Contract Endings: Crucially, many of these vehicles were subject to finance contract extensions. As these contracts eventually end, they will re-enter the used market, supporting overall supply and sales activity, which is a key area for finance partners.
The New Car Market: Modest Growth and New Competition
The new car market is expected to remain cautious, with growth expected to be marginal.
- Modest New Registrations: A modest 1% rise is forecast for 2026, translating to approximately 2.035 million new car registrations.
- Fleet Reliance: This restrained growth is a result of a cautious economic backdrop and softer retail demand, meaning the market will continue its heavy reliance on fleet channels.
- Electrified Sales: EV uptake is set to be maintained, supported by the Fleet sector, the government’s Electric Car Grant, and the increase in the expensive car supplement threshold for EVs to £50,000.
- The Rise of New Entrants: We must also pay attention to the increasing challenge set by new entrant brands, particularly those from Chinese OEMs who debuted in the UK in 2025. Driven by competitive pricing and attractive product ranges, they are seeing their share of enquiries on Autotrader significantly exceed their proportion of listings.
The Great British Car Park: The Looming Supply Challenge
While overall used volumes are up, structural issues linked to past new car performance will create significant sourcing headwinds, especially for independent retailers.
- The Covid-Era Gap: Starting from 2026, the impact of the missing new car registrations from the Covid era will begin to hit the crucial 5-7-year-old age bands, which will tighten supply in this segment of the used market.
- Pre-Pandemic Decline: Furthermore, the gradual decline in new car registrations between 2016 and 2019 will now translate into fewer vehicles entering the 7-10-year-old cohort.
- Intensified Competition: This twin pressure on stock will intensify competition between retailer types as sourcing becomes increasingly challenging. The stock profiles typically relied upon by independent retailers will be affected, forcing them to look wider for cars to sell over the next couple of years.
Our Takeaway for Dealer Partners
The 2026 market will be defined by both opportunity and challenge. While strong used car volumes promise a healthy finance market, the looming supply constraints in the 5-10 year-old segments demand proactive sourcing and a flexible approach to stock acquisition.
At Marsh Finance, we are ready to support our partners through these evolving market conditions, helping you finance the right vehicles and navigate the structural shifts set to define 2026.
Learn more about becoming a Marsh Finance dealer here.