UK Drivers Spent Over £1 Billion More on Cars in Early 2026
Analysis shows a significant increase in new and used vehicle purchases, driven partly by soaring fuel prices and a growing interest in electric vehicles.
British drivers allocated £1.07 billion more towards purchasing new and used cars in the first three months of 2026 compared to the same period in the previous year, according to new analysis from the AA. This spending surge surpasses the record set in the first quarter of 2025.
The Office of National Statistics' consumer trends data indicates that spending on car purchases rose from £17.899 billion in Q1 2025 to £18.969 billion in Q1 2026. This increase generated an additional £178.3 million in Value Added Tax (VAT) receipts for the government.
In contrast, consumer spending on the running costs of personal transport, such as refuelling and maintenance, saw a slight decrease. This spending fell from £20.364 billion in Q1 2025 to £20.277 billion in Q1 2026, a reduction of £87 million.
Factors Driving Increased Car Spending
While a March increase in new car registrations and generally higher car-buying confidence likely contributed to the rise, the AA points to increased sales of electric vehicles (EVs), both new and used, as a significant factor. This trend is attributed to 'pump anxiety' resulting from escalating fuel prices.
New EV sales constituted 27.3% of total car sales in May, with new EV sales showing a 24.3% year-on-year increase, according to Society of Motor Manufacturers and Traders (SMMT) figures. Searches for used EVs on AA Cars have also surged by 78% in the last three months compared to the preceding three months, driven by high fuel costs.
AA President Edmund King noted that accelerating interest in switching to EVs, fueled by driver frustration with fluctuating fuel prices, is expected to maintain momentum in the new and used car markets throughout the year. King suggested that the conflict in the Middle East may have been a catalyst for consumers choosing EVs over petrol or diesel vehicles.
He also observed that the six percent increase in consumer spending on car purchases in the first quarter of 2026, juxtaposed with reduced spending on vehicle running costs, highlights the dual impact of the Middle East conflict. King suggested that the growing adoption of EVs, even with increasingly competitive pricing against internal combustion engine models, is boosting overall turnover in the new and used car markets, thereby increasing VAT revenue for the Treasury.
Long-Term Motoring Spending Trends
Annual figures comparing 2019 to 2025 reveal a substantial increase in consumer spending on vehicles. Spending on new and used cars rose from £57.876 billion to £66.203 billion, while spending on the running of personal transport increased from £70.919 billion to £82.730 billion during the same period. Combined, total motoring consumer spending has climbed from £128.795 billion pre-pandemic to £148.933 billion in 2025, an increase of over £20.1 billion. This rise has contributed an additional £3.35 billion in VAT for the Treasury, with VAT receipts from motoring increasing from £21.47 billion in 2019 to £24.82 billion last year.