Eight consecutive months of new car sales growth masks underlying challenges – EY comments

Ian Smith, Automotive Partner at EY, comments on the Society of Motor Manufacturers and Traders (SMMT) new car registration figures for July 2026:

“UK new car sales rose for a remarkable eighth consecutive month in July, with a 11.7% year-on-year increase to 156,571 units. The significance of this achievement for the UK automotive industry should not be downplayed against a challenging economic and geopolitical backdrop, which has impacted supply chains, fuel prices and consumer confidence.

“Battery Electric Vehicle (BEV) registrations continued their significant upward trajectory last month, with a notable 44.5% year-on-year increase, resulting in a year-to-date market share of 27.5%. Last month’s market share (30%) was the highest it has ever been so, although July’s figure continues to trail the 33% Zero Emissions Vehicle (ZEV) Mandate target, it still represents encouraging progress.

“Despite these green shoots, Original Equipment Manufacturers (OEMs) continue to face a challenging trading environment, with regulatory targets and stiff competition from Chinese OEMs, which have introduced large volumes of affordable BEVs to the UK market in recent months. As BEV adoption continues to grow, sustainable driving demand will increasingly depend on the broader ownership proposition, including charging solutions, financing, connectivity and lifecycle support, rather than the vehicle alone.

“Plug-in Hybrid Electric Vehicle (PHEV) registrations also saw another considerable rise last month, up 33.6%, while hybrids saw 11.6% year-on-year growth. Consistent with the movements seen in June, both petrol (-5.2%) and diesel (-17.7%) sales fell year-on-year in July.”

Retail and fleet sales both rose again in July but challenges remain

“As the more profitable channel, growth in retail sales remains a critical priority for OEMs, so the further increase seen in July is welcome news following a 12.6% year-on-year rise. Recent fleet sales growth also continued with a 9.5% year-on-year uptick. However, with economic growth prospects remaining subdued, the challenges still facing the sector should not be underestimated.”