The announcement by the Bank of England (BoE) that interest rates will be cut by 0.25% to 5%, the first rate cut since 2020, has been greeted with cautious optimism by figures in the automotive retail industry.

Philip Nothard, insight director of vehicle sales specialist Cox Automotive described the reduction as a positive turn. “This reduction will lower the cost of vehicle purchases and ownership for consumers, making cars more affordable and accessible, businesses will benefit from reduced financing costs, encouraging investment and growth within the sector,” he said.

“Additionally, decreasing the overall cost of living will boost consumer confidence and spending power, further stimulating demand for new and used vehicles – this move by the BoE is a welcome relief for the industry, promising a brighter outlook for the coming months,” Nothard added.

Sue Robinson, chief executive of the National Franchised Dealers Association (NFDA), representing car and commercial retailers across the UK commented: “Previously the rate was held at 5.25% for several months, the highest level in 16 years – inflation also appears to be stabilising, at 2.0% in May and June, a key target for the Bank of England.

“Whilst the rate cut brings cautious optimism for the coming months, the automotive sector has demonstrated remarkable resilience, weathering a period of high inflationary pressures – consumers have also felt the strain, particularly with vehicle purchases,” Robinson added.

Stuart James, CEO of the Independent Garage Association, described the reduction as positive news for his members. “This rate cut may help reduce borrowing costs and improve cash flow for independent garage owners, potentially making it easier for them to invest in their businesses,” he said.

“It is a step that could support the growth and stability of garages across the country, assisting them in managing rising costs and maintaining their service to customers,” James added.