UK new car market declines amidst economic uncertainty, reports SMMT

The UK new car market experienced a significant decline in April, with registrations falling by 10.4% to 120,331 units, according to the latest data from the Society of Motor Manufacturers and Traders (SMMT).

This marks the sixth decrease in the past seven months, reflecting a fragile economic environment and weakened consumer confidence. The SMMT reports that 13,943 fewer cars were registered in April compared to the same period last year, and the market is down 25.3% compared to pre-pandemic levels in April 2019.

Several factors contributed to this downturn, including the traditionally quieter period following the March plate change, the late timing of Easter, and the implementation of Vehicle Excise Duty (VED) changes. The VED changes, which affect all new cars and include the Expensive Car Supplement, likely pushed some transactions into March as buyers sought to avoid the increased costs.

Registrations fell across all sales types, with private demand down by 7.9%, fleet demand by 11.9%, and business demand by 10.9%. Fleet buyers continue to drive market activity, accounting for six in ten registrations.

In terms of powertrain performance, hybrid electric vehicle (HEV) demand decreased by 2.9%, while petrol and diesel registrations saw more substantial declines of 22.0% and 26.2%, respectively. However, plug-in vehicle registrations showed growth, with plug-in hybrids (PHEVs) up by 34.1% and battery electric vehicles (BEVs) increasing by 8.1% to 24,558 units. BEVs now hold 20.4% of the market.

While there is a wide range of BEVs available, with over 130 models on the market, their market share remains significantly below the 28% target set by market regulations. The SMMT acknowledges the government’s recent adjustments to the Zero Emission Vehicle (ZEV) Mandate requirements but stresses that the targets remain challenging.

The industry is calling for stronger government incentives to stimulate both overall market demand and the uptake of electric vehicles. Mike Hawes, SMMT Chief Executive, stated: “April’s performance is disappointing but expected after March’s surge. Another month of growth for electric vehicle registrations is good news, however, even if demand remains well below ambition.”

Hawes also highlighted that the industry is currently heavily subsidizing EV uptake. He urged the government to implement a compelling package of measures to encourage consumers to switch to electric vehicles, such as halving VAT on new EV purchases, scrapping or amending the VED Expensive Car Supplement, and equalizing VAT on public charging with home charging.

The latest market outlook has revised the full-year 2025 new car registration forecast upwards to 1.964 million units. However, 2026 expectations remain below the two million mark for the seventh consecutive year. The market share expectation for new BEV registrations has seen a marginal downward revision of 0.2 percentage points to 23.5% for this year, and a 0.3 percentage point decrease to 28% for next year, compared to the ZEV Mandate targets of 28% and 33%, respectively.

Adds Russell Olive, UK Director, at charging management software company Vaylens:

“The brakes predictably slammed on all new car registrations in April. Although EV registrations rose 8.1%, despite many new models now facing the Expensive Car Supplement, EV market share still remains significantly below the target set by the Zero Emission Vehicle Mandate. 

“For businesses looking to invest in and expand their EV fleets, operational costs have increased following the introduction of VED charges. 

 “Reducing VAT on public charging from 20% to 5% would be a smart, overdue step. It would benefit businesses operating EV fleets, whose drivers often rely on public charging when away from the depot, and also ease the burden on drivers without access to home charging.”