Northern Ireland is facing a shortage of new cars and higher car taxes as post-Brexit provisions under the Windsor Framework come into effect in early 2026, causing concern across the automotive sector.
From January 1, all new cars sold and registered in Northern Ireland must meet European Union vehicle standards rather than those applicable in Great Britain. Dealers are warning that many British models currently sold in Northern Ireland will no longer be registered, risking significant gaps in showroom availability and, in some cases, complete withdrawals of certain models.
EU vehicle regulations typically require additional safety features such as: B. Mandatory speed warnings and lane departure warnings on the steering wheel, which are not standard on all vehicles in the UK market. Manufacturers were slow to adapt British models to EU requirements, leaving dealers in Northern Ireland at risk just weeks before the rules came into force.
Company car drivers are also affected by the changes. Benefits in kind tax for vehicles registered in Northern Ireland is calculated according to EU rules, meaning that plug-in hybrid company cars face higher tax charges than identical vehicles registered elsewhere in the UK. Industry figures say this divergence could distort fleet purchasing decisions and make Northern Ireland a less attractive location for employers.
The situation is further complicated by the growing gap between the UK and EU on the move away from petrol and diesel vehicles. The UK plans to ban the sale of new petrol and diesel vehicles from 2030, while the EU ban was originally planned for 2035. This deadline is now expected to be pushed back to 2040, potentially leading to further discrepancies in vehicle availability and compliance.
The Windsor Framework, agreed to avoid a hard border on the island of Ireland, ensures Northern Ireland remains connected to the EU’s single market for goods. Although this was intended to protect the Good Friday Agreement, it had a particularly serious impact on car dealerships that have historically sold the same British vehicles across England, Scotland and Wales.
Senior figures in the automotive industry have held several meetings with Northern Ireland Minister Hilary Benn, pushing for an indefinite delay in the implementation of EU vehicle standards and harmonization of benefit-in-kind tax with the rest of the UK. While ministers are said to be sympathetic, officials have suggested that any changes would have to be part of a wider reset in economic relations between the UK and the EU.
Whitehall sources insist the government remains committed to the “full and faithful implementation of the Windsor framework”, arguing it will preserve Northern Ireland’s unique position and ensure the smooth flow of trade.
There is a lot at stake. The automotive sector employs around 17,600 people in Northern Ireland and sees around 50,000 new vehicle registrations each year, representing around 2.5 per cent of the UK market. Dealers say sourcing vehicles from the Republic of Ireland is not a viable alternative as prices are typically higher due to vehicle registration tax and a VAT rate of 23 percent compared to 20 percent in the UK.
Despite the framework’s goal of maintaining the EU internal market, there is hardly any cross-border trade in new cars. In the ten months to October 2025, just 134 vehicles were imported into the Republic of Ireland, including just six from the UK, highlighting the practical limits of reliance on Irish supplies.
Retailers are already feeling the effects. Manufacturers have limited access to unsold UK stock and while new car sales across the UK have risen by five per cent so far this year, registrations in Northern Ireland have fallen by three per cent.
A government spokesman said ministers were working to ensure manufacturers faced “no barriers to obtaining dual vehicle approvals”, adding the aim was to avoid drivers and dealers in Northern Ireland being restricted in their choice. But as the deadline approaches, industry leaders warn that without quick action, shortages and higher costs are inevitable.
