Rachel Reeves’s car tax hikes cause daily vehicle sales to drop as drivers no longer have ‘confidence’

After the government announced new car tax rules in last year’s Autumn Budget, van sales fell significantly. Research shows that the used van market dropped by nearly 12% following the announcement, and experts are calling for urgent support to help the industry.

The new tax changes, which start in April, have worried drivers because some vans could face taxes of up to £6,000. In the month after the Budget announcement on October 30, 2,165 fewer vans were sold compared to the previous month.

Daily van sales fell from 627 to 552, a drop of 75 vans per day. Between October 1 and 29, 18,174 used vans were sold in the UK. But after the tax changes were announced, sales fell to 16,009 between October 31 and November 30, a decline of almost 12%.

Alastair Campbell from Marketcheck UK said the drop in sales could reflect a loss of confidence in the economy, especially among small businesses that rely on vans. He explained that used van sales are a good way to measure how businesses feel about the economy, as they are sensitive to changes in costs.

Starting in April, car tax rates will rise for all vehicles, including electric cars, which will be taxed for the first time. The rates will vary depending on the type of vehicle and its emissions. For example, electric cars will pay the lowest rate of £10, while hybrids and cars with higher emissions will face much higher charges.

From April 2025, double cab pick-up trucks will also be reclassified as cars for tax purposes, which could further impact businesses.

Campbell added that the drop in van sales might be due to businesses having less money to invest or a lack of confidence in the economy. He said that tracking used van sales is a useful way to understand how businesses are reacting to economic changes.