As the Chancellor approaches the Autumn Budget, the UK economy remains uncertain about its recovery. Inflation has eased but remains stubborn, confidence is thin, and growth is not just weak but slipping backwards in key areas.
Inflation is receding, yet remains sticky, and growth is anaemic. For dealers, manufacturers, and mobility providers alike, this is a delicate backdrop and one where policy direction matters as much as sentiment. The industry now needs a Budget that steadies the picture rather than unsettles it.
EV Support
The Zero Emission Vehicle mandate remains at the top of the sector’s concerns. Retailers are wrestling with high EV stock levels, cooling demand outside fleet channels, and a charging network still patchy in rural and regional areas.
A reduction in the tax advantages of salary sacrifice, combined with early talk of EV-specific road pricing, would put an immediate brake on electric vehicle demand. You cannot pull support away before the market is structurally ready. Doing so risks stalling the transition rather than accelerating it.
A dose of realism is required. The industry is not resisting the 2035 goal, but insisting that infrastructure and affordability must be aligned with volume targets. A sensible recalibration of the ZEV mandate would support rather than undermine long-term ambitions.
R&D reform
SMEs sit at the heart of automotive innovation, yet tighter lending and rising costs have put them under pressure. The current R&D relief framework has become too restrictive, too narrow and too bureaucratic.
It is exactly the wrong moment for policymakers to squeeze relief further. Dealers, suppliers and technology firms are investing heavily in AI-led platforms, intelligent pricing, digital retail journeys and data systems that will define competitiveness over the next decade. Damaging the viability of that investment through tax policy would be short-sighted.
R&D relief should be broadened, simplified and made accessible so that real-world innovators, particularly the smaller companies driving the sector’s digital shift, can actually make use of it.
Workforce strategy.
Electrification and digitalisation are reshaping roles across the industry. A shortage of EV technicians and the growing need for software and data specialists have left employers stretched. The government cannot afford to ignore this skills gap.
A targeted automotive and mobility skills fund, industry-led and government-backed, would provide a clear route for retraining and career transition. Apprenticeship reforms and more flexible use of levy funds are overdue and would help ensure existing workers are not left behind as the sector evolves.
Employee car ownership.
With household budgets tight and company car tax less appealing, now is the right moment to revisit Employee Car Ownership schemes. A modernised ECO model would give employers and employees an alternative that supports mobility without punitive benefit-in-kind treatment, while also encouraging uptake of cleaner vehicles. It is a practical tool that fits both economic reality and environmental goals.
Taxation changes.
Mobility taxation is an area that needs a firmer line from industry, because motorists and businesses have already hit the limit of what can reasonably be absorbed.
Vehicle Excise Duty changes, frozen thresholds that pull more drivers into higher bands, rising benefit-in-kind treatment and a growing patchwork of local charges have created one of the heaviest mobility tax burdens in Europe. Talk of new congestion charges, broader road pricing and further urban access levies is being layered on top of an already swollen system.
There is only so far you can push mobility taxation before it becomes counter-productive. Once it starts suppressing movement, it suppresses spending, productivity and investment. The country is already close to that point. The sector is not arguing against fair contribution, but the current trajectory is unsustainable. The Budget must bring coherence and restraint, not another grab bag of fragmented levies.
A fragile balance.
For now, the economy offers little room for missteps. Inflation has improved enough to ease anxiety but not enough to restore confidence. The Bank of England may cut rates in December, but further easing seems unlikely in 2026. Fiscal tightening remains on the horizon.
Against that backdrop, automotive leaders are hoping for a Budget that restores belief, not through headline giveaways, but through practical, growth-minded measures. A realistic EV policy, reformed R&D support, investment in skills, and a joined-up approach to mobility taxation could together create the conditions for a genuine recovery in both business confidence and consumer demand.
The UK automotive industry has weathered five years of upheaval: from pandemic to chip shortages to the EV transition. What it needs now is policy stability and commercial realism. Without both, even modest economic growth may prove unsustainable.
The challenge for the Chancellor is simple to state, if hard to deliver: turn balance into momentum, and fragility into opportunity. The sector, and the economy, can’t afford another year of treading water.
Mike Allen is the managing director of Cambria Private Capital.
