Peter Vosper: Is this a good time to change your car?

One thing is certain.

There is a lot of uncertainty right now and planning is not easy so let’s focus on what is likely in these key areas.

Firstly, there is optimism that interest rates will be cut in May, and this is likely to be the first of three cuts this year. The EY Item Club forecasts the Bank of England to have cut rates to 3.75 per cent by the end of this year and then to reduce them to 3.5 percent in February 2026.

EY predicts inflation will increase in April to above 3 per cent and remain there for most of the rest of the year but then expects it to fall to 2.4 per cent in 2026. Food prices are forecast to increase by 3.4 per cent.

Fuel prices are down following a drop in the wholesale cost of brent crude. We have been paying around £1.40 for petrol and closer to £1.50 for diesel but these prices have fallen to £1.26 and £1.40 per litre, respectively. Even supermarkets which were criticised by the Competition and Markets Authority for increasing margins and failing to share pricing data, have reacted more quickly, with Asda charging as low £1.25 per litre for petrol and £1.30 for diesel in some regions.

Energy prices are fluctuating and after a 6.4 percent increase in April the Ofgem price cap is expected to fall, with analysts predicting a decline of 9 per cent in July resulting in an estimated £166 annual savings for a typical household.

Britain is hoping to seal a trade deal with President Trump but the Chancellor of the Exchequer, Rachel Reeves said: “Actually our trading relationship with Europe is arguably even more important, because they are our nearest neighbours and trading partners.”

Trump’s tariffs have caused EY to downgrade its UK growth forecast to 0.8 per cent from 1.0per cent this year and to 0.9 per cent from 1.6 per cent for 2026, as they are expected to dampen business and consumer confidence. 

However, Mr Trump has agreed to ease the impact of his tariffs on US carmakers GM, Ford and Stellantis which means any product entering from the US (e.g. Ford Mustang and Jeep Grand Cherokee) will not have to increase prices. 

There is likely to be more imports arriving in the UK from China as they will be affected by the tariffs on their exports to the US. They are already having an impact with BYD’s Atto, Seal and Dolphin, and Chery’s Omoda and Jacoo brands and will introduce more new models as the year progresses.

The new car sales market in March was the highest since Covid and there are many offers out there to move high stocks and increase electric car sales. 

The used market has been refreshed by the part exchanges taken in by dealers and the choice is better than for some time. New technology and more fuel efficient models will help with safety and cost savings both on fuel and future vehicle taxation so if you were thinking of a change it costs nothing to find out if it works for you.