UK new car sales continue momentum in January after December boost

Maria Bengtsson, EY UK & Ireland Mobility Leader, comments on the Society of Motor Manufacturers and Traders (SMMT) new car registration figures for January 2026:

“After returning to growth in December, UK new car sales saw another uptick in January, with registrations up by 3.4% year-on-year to 144,127 units. Last year saw modest growth for new car sales despite the headwinds facing the UK automotive sector including an evolving regulatory landscape, subdued consumer sentiment and muted economic growth. Despite these persistent challenges, last year’s uptick in sales has provided the sector with a solid foundation to build on throughout 2026. 

“Battery Electric Vehicle (BEV) registrations saw a very modest 0.1% year-on-year growth in January – much lower than the growth figures seen in recent months. Despite the potential downside impact of the per-mile tax on electric vehicles (EVs) announced at the Autumn Budget, the Government’s increased funding for the Electric Car Grant, the expansion of EV charging infrastructure, and the higher threshold for the Expensive Car Supplement should help to drive further progress for the EV transition. The UK’s BEV market share was 20.6% in January, significantly behind the 33% Zero Emissions Vehicle (ZEV) Mandate target for 2026.

“Both Plug-in Hybrid Electric Vehicle (PHEV) and Hybrid sales saw growth last month, with 47.3% and 4.8% upticks respectively, as alternative powertrain technologies continue to attract interest.

“Despite the latest EY UK Mobility Consumer Index – published in December – revealing that interest in Internal Combustion Engine (ICE) vehicles could be showing signs of recovery, both petrol (-1.9%) and diesel (-8.8%) sales declined year-on-year in January. This trend is broadly expected to continue throughout 2026, but the Index’s findings were a timely reminder that achieving mass adoption of EVs remains a significant challenge for the automotive industry, as the UK shifts away from the ‘early adoption’ phase.”

Retail and fleet sales both saw growth in January

Maria added: “After an encouraging 16% year-on-year uptick in December, retail sales rose again in January, with a 4.5% year-on-year increase. Meanwhile, in contrast to December’s figures, fleet sales saw a small 1.6% year-on-year rise last month. Fleet electrification opportunities, the Government’s continued support of and commitment to the EV transition, and, crucially, the progress of the UK’s EV charging infrastructure, will be pivotal for driving both fleet and retail demand throughout 2026.”