9:00 am, August 10, 2025
This week’s Bank of England decision to cut interest rates ‘offers some relief’ to the automotive industry.
That is according to Cox Automotive which says that lowering borrowing costs may help ease financing costs for consumers and businesses alike.
Car Dealer reported on Friday that the UK’s central bank had voted to reduce the base rate by 0.25 percentage points to 4% – its lowest level since March 2023.
However, the bank also cautioned over ‘uncertainty’ about future interest rate reductions.
Cox Automotive says that the tone of caution should also be adopted by the motor trade, as persistent headwinds continue to impact the sector.
Phil Nothard, the firm’s insight director in the UK, said the move is a ‘step in the right direction’ but says it will take ‘more than this’ if the industry is to reach its fullest strength.
In a statement to Car Dealer, he said: ‘The reduction in the base rate to 4% offers some relief for the UK automotive sector, but it’s important to view this decision within the wider context of persistent headwinds.
This year to date, private registrations remain below 40% of the total market, lagging far behind the highs seen during the pandemic.
‘Meanwhile, fleets have grown to represent nearly 60% of new registrations, an imbalance that poses long-term sustainability concerns if private buyer confidence doesn’t recover.
‘While the lower interest rate may help ease financing costs for consumers and businesses alike, broader economic uncertainty, cost-of-living pressures, and regulatory challenges continue to restrict the pace of recovery.
‘The rate cut is a step in the right direction, but it will take more than this to restore balance and build momentum in both the private and fleet sectors.’
Reacting to the rate cut, Governor Andrew Bailey described the Bank of England’s action as a ‘finely balanced decision’ after members of its Monetary Policy Committee (MPC) were forced to hold a second vote after failing to reach a majority the first time.
Bailey also stressed that the future path for rate cuts was clouded by uncertainty amid divisions among the committee and an array of conflicting economic data.
‘I do think the path continues to be downwards,’ he said. There is however genuine uncertainty about the course of that direction of rates.
‘The path has become more uncertain because of what we are seeing.’
