The Road Ahead: Challenges and Opportunities Reshaping the Motor Industry

From dealerships to MOT centres, the UK’s motor trade is driving through one of its most transformative periods in decades. Electric vehicles (EVs), digitalisation, and shifting customer expectations are all changing the way we buy, sell, and maintain cars.

For many businesses, the challenge isn’t just to keep up, it’s adapting quickly enough to remain competitive. At NFU Mutual New Forest, Isle of Wight and Bournemouth, we work with a number of motor businesses across our region. Here’s a look at the sector’s key challenges and the changes on the horizon.

Economic pressures
One of the biggest concerns for automotive businesses is cost. Rising taxes, utility bills, and operational expenses have forced many to raise prices. Nearly 9 in 10 (89%) independent garages and dealer workshops listed these pressures as their top challenge in 2025, up from 75% in 2024, according to the Motor Ombudsman[1]. The hike to Employers’ National Insurance contributions (from 13.8% to 15%) in April 2025 has only added strain.

Customers are feeling the pinch too. More drivers are delaying repairs, attempting DIY fixes, or skipping servicing altogether, creating risks for both road safety and garage income.

When finances are stretched, the risk of fraud often follows. From authorised push payment scams, where fraudsters pose as suppliers to intercept payments, to identity theft, criminals are targeting the sector. In one high-profile case in 2024[2], an organised crime group used fake identities to secure finance on 75 high-value cars (inc. Porsches, Mercedes and BMWs) worth over £2 million.

Economic pressures are also affecting the mental health of people who work in the industry. Over a quarter of automotive workers (27%) reported difficulty managing their mental health in 2024, with money concerns being a growing factor[3]. 

And then there’s the skills shortage. Finding qualified technicians, mechanics, and repair specialists is already a challenge but the transition to EVs is only increasing this demand (see below). The Institute of the Motor Industry (IMI) estimates a shortfall of almost 3000 EV-qualified technicians by 2031[4]. 

The growth of EVs
The move towards EVs is both exciting and disruptive. With the 2030 ban on new petrol and diesel cars looming, and the Zero Emission Vehicle (ZEV) Mandate requiring EV sales to jump from 22% to 28% in 2025[5], the pressure is on.

Consequently, dealers are upskilling their teams to handle customer questions about batteries, charging, range, and lifespan, while investing in charging points and specialist diagnostic equipment. In garages, the race to train technicians is urgent. EV-related repair requests jumped 98% in 2024[6], yet only 24% of mechanics are qualified to work on them[7]. Businesses like Halfords have been training EV specialists since 2016[8], but the gap remains significant. 

Some garages are also facing a new reality that EVs may mean fewer routine jobs and parts replacements compared to traditional cars, and thus, potentially impacting long-term revenue.

Technological advancements
Digitalisation is no longer a “nice to have”, it’s essential. Customers increasingly expect to browse stock, book test drives, and even buy cars entirely online. Many dealerships are upgrading IT systems, integrating data processes, and creating more user-friendly websites and apps.

However, the journey isn’t the same for everyone with some dealers further along than others. For dealerships with older legacy systems, becoming digitised can be slow and costly. And as with any digital shift, cybercrime is a growing concern. Motor retailers saw a 33% annual rise in cybercrime cases, according to BDO[9]. 

Changing consumer preferences
The used car market is booming, especially for EVs. A record number of pre-owned EVs were sold in the UK in 2024, making up 2.5% of all used car sales[10], according to the Society of Motor Manufacturers and Traders (SMMT)[11]. With household budgets stretched, more buyers are seeking value in both electric and petrol models.

A preference for sustainability is being shaped by customer behaviour and regulatory requirements. Under the Minimum Energy Efficiency Standards (MEES), commercial properties including dealerships must meet specific Energy Performance Certificate (EPC) ratings. This often means investing in energy-efficient lighting, upgraded HVAC systems, and other green measures.

Another significant shift is the rise of Chinese EV brands, including BYD and OMODA, appearing in UK showroom line-ups. While this presents new sales opportunities for dealerships, it also requires investment in education and marketing to overcome any consumer scepticism and emphasise the advantages of the brands.

As consumer preferences have evolved, the car industry is experimenting with structural changes. One significant shift has been the move to the agency model, where manufacturers sell vehicles directly to customers online, leaving dealers to handle delivery, after-sales care, and servicing. Recently, however, some automakers have begun moving away from this approach.

Meanwhile, competition in the sector remains fierce. For dealerships, this heightens the need for brand differentiation, with many manufacturers seeking to stand out through superior customer service, distinctive product offerings, or tailored financing solutions.

Final thoughts: looking ahead
The UK motor trade is no stranger to change, but the current mix of economic pressure, rapid technological change, and evolving consumer shifts is unprecedented. Businesses that invest in skills, embrace innovation, and keep the customer experience central will be best placed to succeed.

The road ahead isn’t without bumps but for those prepared, it’s also full of opportunity.

Support you and your business

At NFU Mutual New Forest, Isle of Wight and Bournemouth, we work with motor businesses of all sizes to help them manage risk, now and in the future.

Our friendly, experienced team, based in Brockenhurst (New Forest), Newport (Isle of Wight) and Westbourne (Bournemouth), pride themselves on building long-term relationships founded on trust, understanding and specialist local knowledge

We’re committed to doing things the traditional way, with face-to-face conversations, personal visits, and a dedicated team member who’ll be there whenever you need them. With a genuine commitment to our customers and an in-house claims team who’ll deal with you directly, we’re here to help protect what matters most.

Because with us, protecting your business is personal. 

New Forest: 01590 624744 | New Park, Brockenhurst, SO42 7QH  

Isle of Wight: 01983 522290 | 2 Langley Court, Pyle Street, Newport, PO30 1LA  

Bournemouth: 01202 764322 | 16 Landseer Road, Westbourne, BH4 9EH  
 

Contact us here

[1] The Motor Ombudsman, Jan 25
[2] Herts.police.uk, April 24
[3] AM Online, April 24
[4] IMI, Aug 24
[5] RSM, Jan 25
[6] AM Online, Nov 24
[7] IMI, Aug 24
[8] Whatcar, May 24
[9] BDO, Nov 24
[10] SMMT, Feb 25
[11] SMMT, Feb 25