Car sales in the US and UK surprised in 2025, driven by affluent buyers and rising EV demand from Chinese brands. The auto industry faced major challenges due to the higher tariffs that led to drastic increase in the prices of cars and auto parts still managed to make the highest profit.
The sale of cars in the UK and US unexpectedly rose in 2025 to about 16.3 million in the United States and 2 million for the first time in Britain. The auto industry faced major challenges due to the higher tariffs that led to drastic increase in the prices of cars and auto parts. Economic strains also pushed up default on car loans to people with less than stellar credit
Chinese players also increased their share in Europe’s second-largest electric market seeing the extensive purchase. Several large automakers, including General Motors and Toyota Motor, told investors on Monday that they had closed out the year with strong sales.
How is this possible?
The auto industry has evaded a slump largely because affluent Americans with well-paying jobs and robust savings have continued to buy new cars at a decent clip. And they are more than making up for the cars that lower-income Americans are no longer buying.
“It’s obviously not a full recovery,” said SMMT chief executive Mike Hawes. “If you strip out the Chinese brands, there wouldn’t have been growth in the market.”
The higher purchase in the UK was mainly driven by the rise in demand for electric vehicles, which accounted for 23 per cent of the UK market.
Families with a household income of $150,000 a year in America or more now buy 43 percent of the new cars sold in the country, up from one-third of all cars sold in 2019 before the Covid-19 pandemic, according to Cox Automotive, a research firm. By comparison, households with incomes less than $75,000 are buying about a quarter of vehicles sold, down from more than a third in 2019.
Rise in Chinese brands
The rapid rise of Chinese brands has contributed to the sharp increase in EVs and plug-in hybrid sales — they increased their share of the UK’s EV market to 12.8 per cent last year, compared with 8.5 per cent in 2024.
Chinese carmakers such as BYD and Chery, which sells the Omoda and Jaecoo brands, have aggressively targeted the UK market in the absence of higher import tariffs imposed on Chinese-built EVs in other parts of Europe.
Car sales expected to dip in 2026
New car sales are expected to dip in 2026 but not by much. Cox estimates that automakers will sell 15.8 million cars this year, a 2 percent decline but not far from the 16 million threshold that industry executives consider a good year. Of course, making predictions is hard, and analysts acknowledged that sales could slow more if the economy weakened sharply. One worrying sign is that sales in the final three months of last year were weaker than earlier in the year.
In April, the UK government watered down some of those targets by lowering the fines and analysts say manufacturers are unlikely to pay penalties for last year due to other flexibilities built into the SMMT scheme, where it is estimated that manufacturers spent roughly £5.5mn last year — equivalent to £11,000 per newly registered electric car — to offer discounts.
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