Rachel Reeves causes huge slump in used car market after 'concerning' Budget 'ripped through the economy'
WATCH: Rachel Reeves says she will continue to support the purchasing of electric vehicles
GB NEWS
The October Budget delivered by Chancellor Rachel Reeves has been found to have delivered a blow to the used car market with a significant drop in sales.
The Chancellor delivered Labour's first Budget in almost 15 years last October, with Rachel Reeves making several important changes to motoring policies.
This included a surprise freeze to the 5p per litre cut to the rate of fuel duty, car tax changes to be introduced in April and extra backing for electric vehicles.
However, new data shows that the UK's used car market saw a stark drop in sales in the immediate aftermath of the Autumn Statement.
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Labour's October Budget may have contributed to a huge slump in used car sales at the end of last year
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In September and October, a total of 681,293 vehicles were sold, which was followed by a significant drop of 23.02 per cent in November and December with 524,476 sales.
This compares to a drop of just 8.29 per cent over the same time period in 2023, suggesting that the Budget could have put drivers off from investing.
Alastair Campbell, from Marketcheck UK, commented on the data, saying there had been a "significant downturn" which was "deeply concerning".
He added: "Factors contributing to this downturn may stem from the broader impact of the Autumn Budget - the implications of these changes have rippled through the economy, impacting consumer confidence and spending power.
"The decrease in sales volumes from 681,293 units in September and October to just 524,476 in November and December suggests a contraction in the market. Not the usual yearly fluctuations."
Campbell added that the research, which is matched against data from the DVLA and Society of Motor Manufacturers and Traders (SMMT), showed how the second-hand car market was going through a "challenging period".
He noted that the current trend could signal underlying challenges for the automotive industry, which could have a knock-on effect on consumer goods and services.
"If this trend continues, we could see a recalibration of pricing strategies, inventory management, and a significant shift in consumer behaviour," Campbell said.
READ MORE: UK car production plummets in ‘expected’ move as drivers fail to back electric cars
The expert urged motoring companies to understand the full scope of the changes or they could be left behind if consumer demand continues to fluctuate.
Data from the SMMT shows that a total of 1.95 million new cars were registered in 2024, a year-on-year change of 2.6 per cent. This includes more than one million petrol models and 381,000 electric vehicles.
In a bid to boost the number of electric vehicle sales, Rachel Reeves unveiled a £120million funding increase for the plug-in van grant and the manufacture of wheelchair accessible EVs.
The MP for Leeds West and Pudsey added that the Government would "widen the differentials" in Vehicle Excise Duty first year rates between EVs and hybrids or internal combustion engine cars.
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Used car sales saw a significant drop in the months after the October Budget
PAThe Government also maintained EV incentives in the Company Car Tax regime and extended 100 per cent First Year Allowances for zero emission cars and EV chargepoints for a further year.
Rachel Reeves is set to deliver the current Labour Government's first Spring Statement on March 26, when further tax changes could be introduced.
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