Trade tensions, EV targets and fragile recovery: what Professor David Bailey’s warning means for UK garages

Speaking at last month’s 2025 IAAF Conference, automotive economist Professor David Bailey delivered a sobering assessment of the forces reshaping the UK automotive landscape.

While headline new car registrations suggest cautious recovery, David warned that beneath the surface the industry faces deep structural challenges, many of which will land squarely on independent garages in the years ahead.

From trade tariffs and Brexit fallout to EV mandates and falling UK car production, his message was clear: uncertainty hasn’t gone away and workshops need to be prepared.

David highlighted renewed uncertainty around US trade tariffs, particularly under a potential Trump administration. While a limited quota of UK-built vehicles may attract a reduced 10% tariff, anything beyond that faces 25%.

That matters because cars are the UK’s number one export to the US, worth around £8.3 billion a year. Jaguar Land Rover alone exports roughly 100,000 vehicles annually, enough to use the entire lower-tariff quota.

For the wider industry, this creates hesitation, delayed shipments and the risk of lost orders. David warned that suggestions of 25,000 UK automotive jobs at risk may actually understate the problem, as many plants are already operating well below capacity.

The concern for independents? A continued decline in domestic vehicle production reduces long-term parc renewal and weakens the wider ecosystem that supports skills, parts supply and technical investment.

Brexit: The drag that’s never left

Brexit, David argued, remains a persistent economic brake. The Office for Budget Responsibility estimates a 4% long-term hit to UK GDP, with some economists suggesting the real impact could already be closer to 5–8%.

David likened it to “driving a car with a flat tyre”, the economy still moves, but everything is slower and harder.

While the Labour government talks of a “reset” with the EU, ruling out rejoining the single market or customs union limits any meaningful economic boost. For garages, this means continued friction in parts supply, higher costs and less certainty around future regulation and standards alignment.

China: Slowing growth, rising competition

Another underreported issue is the sharp slowdown in the Chinese economy, once growing at 10% annually and now closer to 4–4.5%. This has already reduced UK vehicle exports to China but more significantly, it accelerates the global push of Chinese manufacturers into Europe and the UK.

With the EU imposing tariffs of up to 45% on Chinese cars and the US over 100%, the UK faces a strategic choice: protect domestic manufacturing, or prioritise rapid EV adoption via cheaper imports.

Either way, independent garages must prepare for a growing mix of unfamiliar brands, platforms and technologies entering the UK car parc.

New car sales recover, but context matters

On the surface, the UK new car market appears healthier. Registrations are up almost 4% year-on-year, with SMMT forecasting just over two million sales in 2025, the first time since 2019.

But David urged caution. Pre-pandemic sales regularly reached 2.5 million, a level he believes was unsustainable. Today’s recovery is partial, not a return to “normal”.

More significantly, electrified vehicles — BEVs, plug-in hybrids and hybrids — now outsell petrol cars for the first time. Diesel continues its long decline.

For garages, this marks a definitive turning point. The direction of travel is set, the only question is pace.

Used cars: A bright spot for independents

Where the outlook is more positive is the used car market. Around four million vehicles changed hands in the first half of 2025, with transaction volumes back at pre-pandemic levels.

There are still shortages in the three-to-five-year-old bracket, but overall resilience is strong, good news for independents whose core workload depends on an ageing parc.

As new car prices rise and private EV uptake remains cautious, used vehicles will continue to underpin workshop demand.

UK production: A low-volume crisis

UK car production, however, paints a stark picture. Forecast output for 2025 is just 750,000 vehicles, compared with a peak of 1.7 million in the mid-2000s.

David cited Brexit, COVID, the diesel collapse and most recently the JLR cyberattack, which pushed production to a 75-year low last October.

Without a coherent industrial strategy, he warned, recovery to even one million units by 2030 is far from guaranteed.

EV take-up: Progress, but not at the speed policy demands

Battery electric vehicle sales are improving, driven largely by fleets rather than private buyers. Key barriers remain:

• High upfront costs
• Patchy charging infrastructure outside major cities
• Around one-third of UK households lacking off-street parking, making home charging impossible
• Expensive public charging compared to domestic tariffs

David noted that EVs become cost-competitive with petrol cars when battery prices fall below $100 per kWh. Europe currently sits around $115, while China has already crossed that threshold, explaining why EVs there are cheaper and margins higher.

The 2030 ICE ban: A policy outlier

Perhaps David’s strongest criticism was reserved for the UK’s 2030 ban on new ICE vehicle sales. While many countries have opted for 2035, the UK stands largely alone alongside a handful of smaller markets.

Calling it a “moonshot without NASA”, David argued that policy ambition has not been matched by joined-up investment in infrastructure, energy costs or consumer incentives.

The EV mandate, which requires manufacturers to sell 28% BEVs in 2025 and 80% by 2030, places further strain on an already fragile market, with penalties looming for those who fall short.

What’s your view? Are these pressures already being felt in your business, or do you see the opportunities outweighing the risks? Share your thoughts in the comments below.