UK new car sales growth slows amid market headwinds – EY comments

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

“Following significant growth in September supported by the new registration plate, UK new car registrations saw a more modest uptick in October, with a 0.5% year-on-year rise to 144,948 units. Despite an encouraging recovery in September with a 13.7% year-on-year rise following falling registrations in both July and August, October’s slowdown in growth was unsurprising, given the range of headwinds facing the market and the recent well-documented cyber-attack on a major UK auto manufacturer.

“With UK economic growth prospects continuing to appear relatively subdued, the regulatory environment remaining complex, uncertainty lingering ahead of the Autumn Budget and the pause in interest rate cuts expected to impact consumer confidence, there are marked challenges ahead for the automotive industry. However, UK automotive companies have shown resilience throughout this year despite a range of challenges and headwinds, with innovation and scenario planning continuing to be as important as ever.

“Battery Electric Vehicle (BEV) registrations continued their upward trajectory last month despite the headwinds facing the auto sector, with a 23.6% year-on-year rise. This was a less significant uptick than the 29.1% increase seen last month, but BEVs accounted for 25.4% of market share in October, up from 23.3% in September. However, this remains below the 28% Zero Emissions Vehicles (ZEV) Mandate target, which continues to be a key regulatory challenge for automakers. 

“Alternative powertrain technologies are continuing to entice consumers, with Plug-in Hybrid Electric Vehicle (PHEV) and Hybrid sales growing by 27.2% and 2.2% respectively year-on-year. This underscores the continuing shift in consumer habits and preferences towards greener and cleaner transport, with both petrol (-11.6%) and diesel (-22.9%) sales falling year-on-year in October. 

Retail sales rose again in October despite market headwinds

Maria added: “Following strong growth in September, retail sales increased again in October with a 2% year-on-year uptick. Retail sales are a crucial source of support for the automotive sector given retail is the more profitable sales channel. In contrast, fleet sales fell year-on-year in October, with a modest 1.5% decline. Going forward, the UK auto industry’s recovery from the recent cyber-attack and the ability of automakers to persuade consumers to purchase vehicles despite an uncertain economic backdrop will be critical. Appealing price propositions and incentives such as the UK’s recently introduced grants for EVs priced under £37,000 will have a crucial role in ensuring consistent growth in new car registrations going forward.

“There could also be an opportunity at the Autumn Budget for the Government to pledge further spending towards improving charging infrastructure and reducing costs associated with the electric vehicle transition for businesses and consumers alike, such as reducing or abolishing Vehicle Excise Duty for BEVs or cutting VAT for public charging. However, given the lack of fiscal headroom, the levers available for the Chancellor to pull beyond existing measures may be limited.”