Autumn Budget: automotive industry responds
Chancellor Rachel Reeves announced in her first Autumn Budget that £500m had been set aside to fix the UK’s pothole problem.
Meanwhile, she also announced a freeze on fuel duty and restated the government’s commitment to phase out the sale of new internal combustion engines by 2030.
The industry has been responding to these and other announcements.
SMMT:
Mike Hawes, SMMT chief executive, said: “The Chancellor is right to set out measures to address the deficit while investing for future growth. The automotive industry is a growth-driving sector, fundamental to the delivery of the country’s net zero ambitions. We therefore welcome the commitment of £2bn of automotive transformation funding as part of the government’s modern Industrial Strategy.
“Delivering that strategy depends on the UK being globally competitive. Additional National Insurance Contributions will put massive pressure on the automotive supply chain which is predominantly SMEs. Next year’s spending review must find resources to fund measures that alleviate the strain on these companies and help them transition to an electrified future.
“A strong manufacturing sector depends on a strong market. The lack of substantive measures to support the new car market – in particular for electrified vehicles – is hugely disappointing. We welcome the extension of the Plug-in Van Grant and company car tax benefits, but these alone cannot drive the growth in demand needed.
“With the sector challenged to deliver the world’s most ambitious EV transition targets, achievement of those targets is in serious doubt. There must be an urgent review of the market and regulation, else the cost will soon be felt in reduced UK investment, economic growth and jobs.”
The Institute of the Motor Industry:
“The IMI is delighted that the Chancellor has acknowledged the importance of automotive in the industrial strategy with a £2bn commitment for the sector, supporting the growth of the electric vehicle parc. The IMI believes it is critical that a share of this commitment is allocated to training and continuous professional development for those working both inside and outside the factory gates, alongside manufacturing infrastructure.
“The professional body for people in automotive also welcomes the government’s commitment to further education with a £300m increase in funding and the increase in Employment Allowance – to £10,500 – for the smallest employers.
“The IMI is however, disappointed by the much-rumoured increase in employer NI contributions from April 2025, combined with a reduction in the secondary threshold to £5,000 pa. These changes are likely to have a significant impact on costs for small businesses that operate in the automotive sector.
“These additional costs are likely to dampen investment in training and continuous professional development and impact the ability of the sector to be ready to support the governments decarbonisation targets.”
National Franchised Dealers Association
Sue Robinson, chief executive, said: “NFDA welcome the Government’s decision to freeze fuel duty once again, as well as continuing the 5p cut, offering vital relief to the sector and consumers during challenging economic times. The rising costs of fuel have been one of the biggest pressures on consumers, and this freeze will help many motorists across the UK as well as keeping inflationary pressures down. NFDA strongly opposed any increase in its Budget submission.
“However, raising employer National Insurance Contributions by 1.2% to 15% will significantly increase the cost of running a franchised dealership, particularly at a time when businesses are already facing pressure from rising energy costs and adapting to the shift towards electric vehicles.
“The NFDA also welcomes the Government’s recognition of the importance of electric vehicles in this year’s Autumn Budget. The Chancellor announced the maintenance of existing incentives for EVs in company car tax from 2028. It is crucial that, with the ZEV mandate target set to rise to 28% next year and lagging private demand, there is continued investment in EV infrastructure to help drive adoption across the sector.
“There was also mention in the Budget of the Government’s commitment to phasing out new internal combustion engines cars by 2030.”
BVRLA:
BVRLA chief executive, Gerry Keaney, said: “This was a complex budget at a difficult time. The increase to employers’ national insurance will have a substantial impact on businesses and their customers. The full scale of its impact will only be seen in time.
“For our sector, the Chancellor has left many challenges unresolved. As penalties to stay in ICE vehicles ramp up in line with the ZEV mandate, more needs to be done. The barriers relating to the rental sector, charging infrastructure, consumer education and the used EV market, all need close attention.
“The Budget did bring some green shoots of positivity, suggesting that the government is taking the UK’s transition to cleaner, greener vehicles seriously. The confirmation that the fair EV company car tax regime will be continued at least to 2030 is a positive step, supporting a vital contributor to the transition and a bright spot of success up to now. Extending the Plug-in Van Grant provides the sector with a much-needed boost.”
The AA:
Edmund King, AA president, said: “Drivers were worried that pre-Budget scares of hiked fuel duty may end in a nightmare, but the Chancellor has pulled off the ultimate trick and treat. The fuel duty freeze will be a big relief.
“We also welcome extra funding as potholes place real safety hazards for those of two wheels or two feet, and expensive damage for those on four wheels. As we stressed to the Chancellor and Transport Minister, we would also like to see a longer-term commitment to funding as this is important in terms of road safety, would save money for health service and repairs; but it needs to be ring-fenced with an emphasis on innovation and more permanent preventative maintenance.”
The RAC:
RAC head of policy Simon Williams said: “The commitment of £500m to fixing potholes is positive news for drivers as it should enable cash-strapped local authorities to begin the process of improving the quality of their roads.
“But it’s vital councils don’t just use the money to fill potholes as this is unlikely to deliver the long-term benefit drivers so badly want to see. We believe greater use of preventative maintenance is essential. Surface dressing roads at regular intervals is a proven, cost-effective way of ensuring potholes don’t appear in the first place, along with resurfacing the worst affected roads.”
IAM RoadSmart
IAM RoadSmart policy and public affairs manager William Porter said: “We welcome the Chancellor’s decision to maintain the fuel duty cut, at least for now. Motorists have endured a torrid few years of high prices at the pumps and this decision will give them a much-needed boost. We separately welcome the commitment to introduce the Fuel Finder scheme by the end of 2025, which should increase pricing transparency at the pumps.
“However, at a time when insurance premiums are at near record highs, not using the Budget as an opportunity to reduce insurance premium tax for young drivers who undertake additional training is a missed opportunity to both reduce their premium costs and improve road safety. Younger drivers have seen their quotes skyrocket into the thousands and sadly risks many in this age group being priced out.”
