UK new car registrations fall, but there is scope for a return to growth

Maria Bengtsson, EY UK & Ireland Mobility Leader, comments on the Society of Motor Manufacturers and Traders (SMMT) new car registration figures for July 2025:

“Despite a return to stronger levels of growth in new car registrations in June, sales fell again last month, with a 5% year-on-year decline to 140,154 units in July. 

“Battery Electric Vehicles (BEVs) continue to display significant levels of sales growth, with a 9.1% year-on-year increase last month. Despite consistent growth over recent months, BEV market share for this year-to-date (21.3%) remains behind the Zero Emissions Vehicle (ZEV) Mandate’s 28% target. However, the introduction of new grants for electric vehicles (EVs) priced at or below £37,000 should support demand, particularly for those vehicles considered the ‘greenest’, which could be discounted by up to £3,750 each. Conversely, there is a possibility that these grants could have a downside impact on demand for used EVs, Plug-in Hybrid Electric Vehicles (PHEVs) and hybrids.

“Internal Combustion Engine (ICE) vehicle registrations continued on their recent downward trajectory, with both petrol (-14.7%) and diesel (-7.9%) seeing year-on-year declines – a trend that is expected to persist as the UK’s transition towards cleaner and greener transport gathers further momentum. However, challenges with the UK’s EV charging infrastructure including a lack of charging stations, and that many BEVs remain expensive to purchase, mean the petrol and diesel market continues to compel many road users, albeit to a lesser extent than in previous years. 

Fleet and retail sales both fall year-on-year

Maria added: “After a long period of consistent decline, retail sales had started to show signs of stabilising, with growth in two of the previous three months across April to June. However, retail sales declined once again in July, with a 3.2% year-on-year fall – highlighting a marked challenge for auto manufacturers given retail is a more profitable channel than fleet. 

“Meanwhile, fleet sales, which have encountered a more difficult year in 2025 following consistent growth last year, were down by 6.5% year-on-year in July. However, there appears to be scope for a return to growth across the remainder of the year as more businesses look to electrify their fleets, particularly considering the new EV grants on offer. 

“The resilience shown by automotive companies so far in 2025 is admirable given the complex combination of hurdles they currently face, including global trade market disruption, consumer sentiment challenges and evolving regulatory requirements. However, if buoyant levels of growth are to be unlocked on a consistent basis, innovation to optimise the consumer experience, competitive price propositions for BEVs, significant improvements in charging infrastructure, and a sharp focus on both legacy peers as well as new entrants to the market, will be crucial for UK automakers.”