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David Borland, EY UK & Ireland Automotive Leader, comments on the Society of Motor Manufacturers and Traders (SMMT) new car registration figures for April 2025:
“After a crucial return to growth for the UK automotive industry in March, April saw new car registrations fall back into a downward trajectory, with a total of 120,331 – representing a 10.4% year-on-year decline. This underscores the significance of the challenges facing the UK automotive sector, which includes the impact of trade tariffs, downbeat consumer sentiment, economic headwinds and a complex and changing regulatory landscape.
“Falling sales for Internal Combustion Engine (ICE) vehicles continues to be a recurring theme, with both petrol (-22%) and diesel (-26.2%) sales down once again last month. However, cleaner and greener alternative powertrain technologies are providing a pivotal support to the automotive industry.
“Indeed, Battery Electric Vehicle (BEV) sales showed further promising growth last month, with a year-on-year uptick of 8.1%. Recent changes to the Zero Emissions Vehicle (ZEV) Mandate have been welcomed by automakers, albeit the headline targets in place remain the same. Year-to-date BEV market share now stands at 20.4% according to April’s figures, which still trails a significant way behind the 28% ZEV Mandate target. Whilst the recent greenshoots are encouraging, BEV sales growth will need to increase at a faster pace if automakers are to ensure regulatory compliance and minimise financial exposure.
“Meanwhile, Plug-in Hybrid Electric Vehicles (PHEVs) continued to show progress last month, with a year-on-year sales increase of 34.1%, while Hybrid sales saw a modest decline of 2.9%.
“The UK automotive sector was already under pressure before the recent US tariff announcements, with stress evident across the entire value chain, from suppliers to dealers. In fact, EY’s latest Restructuring Pulse Survey - a European survey of workout bankers - underscored these challenges, naming the sector as the most likely to undergo corporate restructurings in 2025.”
Tariffs add to the complexity of the road ahead
Maria Bengtsson, UK Mobility Leader at EY, said: “The recent introduction of US tariffs has presented a new and complex headwind to the UK automotive sector. Not only will the tariffs have an impact on UK exports to the US, but they have also caused significant uncertainty, which in turn could lead to delays in purchase decisions from consumers and businesses alike.
“The magnitude of the challenges ahead for the UK’s automotive industry cannot be downplayed. However, auto businesses have displayed impressive resilience in recent years through a range of complex developments, and UK car production rose for the first time in 12 months in March, representing a step in the right direction. It will be critical for businesses in the sector to remain agile, particularly given the market volatility which is likely ahead.”
Retail and fleet sales both in need of improvement
Maria Bengtsson added: “In March, in contrast to recent historical trends, both retail and fleet sales saw a significant year-on-year increase. However, in April, both channels saw a decline in sales, with -7.9% for retail and -11.9% for fleet, which suggests March’s recovery was a sign of seasonality rather than the start of a sustained recovery.
“Fleet sales were remarkably resilient last year, so the fact they are now facing a more challenging outlook is concerning. However, with fleet being the less profitable channel for automakers, the persistence of sluggish retail sales presents a larger issue for the UK’s automotive industry.
“Helping consumers to feel informed, assured and compelled enough to make purchasing decisions will continue to be a critical priority for automakers, particularly given the subdued economic outlook and the impact that could have on consumer confidence. A key question is how big a role the government can play in supporting manufacturers with these challenges, and whether government incentives can provide a sustainable long-term solution.”