Britain’s new car market rose by 11.7% in July with another month of record EV growth, according to figures from the Society of Motor Manufacturers and Traders (SMMT).
The performance marks an eighth consecutive month of growth as the market continues its longer-term recovery towards pre-Covid levels.
SMMT figures showed battery electric cars (BEVs) achieved another record volume for the month, up 44.5% to claim a 27.5% share.
It follows separate figures from New Automotive, which revealed for the second consecutive month, battery electric vehicle (BEVs) sales have outpaced the ZEV mandate trajectory.
Hitting targets
According to New Automotive, the 27.5% means it means the sector is now above the 33% ZEV Mandate target for the year.
This is because it estimates the effective 2026 market-wide target, after accounting for scheme flexibilities is 24.6% – compared with a year-to-date BEV share of 25.3%.
In addition, the SMMT added that longer term, BEV share is expected to rise to 32.1% in 2027.
ECG
Electric Car Grant (ECG) eligible vehicles account for around 10% of BEV registrations, the SMMT said, and around a third of the BEV market is delivered through the ECG, illustrating the value of incentives.
The SMMT added that Mandate flexibilities were “helping bridge some of the gap between natural demand and ambition”.
But it warned the value will diminish as targets accelerate, and continued its call for “urgent reform” of the Mandate.
Mike Hawes, SMMT Chief Executive, said:
“July’s record EV performance is a great achievement, reflecting industry’s huge investment in zero emission mobility. But that progress cannot be sustained if manufacturers continue haemorrhaging billions in EV discounts, distorting demand to avoid even steeper penalties.
“The sector’s commitment to decarbonisation is not in doubt but its ability to remain viable – and attract investment for an EV future – is under intense pressure. A sustainable transition will not happen merely by compelling supply when underlying demand is not keeping pace despite year-on-year growth. We need urgent reform of the regulation, else Britain risks undermining its competitiveness and the jobs and livelihoods that depend on this industry.”
Sue Robinson, Chief Executive of National Franchised Dealers Association (NFDA), said:
Today’s figures showing new car registrations up 11.7% in July are a welcome sign of resilience in the market. Franchised vehicle dealers continue to work hard to give consumers the choice, advice and support they need when buying a new vehicle.”
“What’s particularly encouraging is that manufacturers are meeting consumer demand for electric vehicles as this segment continues to grow. We will however continue to call on the Government to review the punitive ZEV mandate, which is unnecessarily distorting the market.
“Government stability remains essential. NFDA continues to call on the Government to provide the policy certainty dealers and manufacturers need to plan for the long term.”
Colin Walker, Head of Transport at the Energy & Climate Intelligence Unit (ECIU), said:
“This is yet another month of strong EV sales growth in the UK, as an ever-increasing number of British drivers respond to volatile petrol prices by looking for cheaper and cleaner electric driving. Families are being helped to make this switch by the Government’s ZEV mandate which, by incentivising competition between manufacturers as they strive to hit their EV sales targets, has driven down prices with new EVs now roughly the same cost as a new petrol car, but much cheaper to charge.
“With prices down, sales up, and the car industry on track to exceed its real EV sales targets for 2026 – just as it did in 2024 and 2025 – the arguments being put forward to weaken these targets appear increasingly outdated. With VW and Kia amongst the companies leading EV sales in the UK, and EVs now accounting for over half of the cars sold by Renault, it is clear that legacy car manufacturers are more than capable of rising to the challenge of electrification. Given most of the cars made in the UK are exported and Europe, our biggest export market, is seeing a similar surge in EV sales, laggard companies need to focus on catching-up. Any weakening of the mandate could encourage companies to slow their transition to EVs, risking a repeat of the mistakes of the 70s and 80s when a failure to modernise in the face of competition from abroad decimated the UK car industry, and leave regular families stuck paying much higher petrol driving bills.”
James Hosking, Managing Director of AA Cars, said:
“An eighth consecutive month of growth, and July’s strongest performance since 2019, shows that the new car market is continuing to build momentum. The 11.7% rise is particularly encouraging given July is traditionally a quieter month ahead of the September registration plate change.
“Competition between manufacturers is helping to sustain demand. A broader choice of models, attractive finance offers, and significant discounts are giving buyers more reasons to consider changing their car. However, affordability remains the defining issue, with households looking beyond the headline price to monthly repayments, insurance and everyday running costs.
“Electric vehicles continue to play a central role in the market’s growth, with BEV registrations rising 44.5% in July. Greater model choice, increasingly competitive pricing, heavy discounting and government incentives are encouraging more drivers to consider making the switch, although demand will still depend on confidence around charging, upfront costs and the direction of government policy.
“The Electric Car Grant, as well as 0% interest finance deals from new brands entering the UK, have opened up EVs to more buyers.
“Continued growth in new car registrations should also support the used market. As more motorists change their vehicles, additional part-exchanges will return to dealer forecourts, improving the supply of younger used cars that has remained constrained in recent years.
“That should give second-hand buyers more choice, but value will remain critical. Consumers are comparing models, fuel types and total ownership costs more carefully, so dealers will need to price competitively and give buyers confidence that the vehicle represents good long-term value.”
Russell Olive, UK Director at Vaylens, said:
“Britain’s new-car market still leans heavily on fleet demand. Fleets accounted for six in ten registrations in July as the overall market grew 11.7%. The 44.5% jump in battery-electric registrations looks dramatic, but it was boosted by a weak July last year. Even after a record July, BEVs accounted for 27.5% of registrations, leaving a considerable gap to the 33% mandate target.
“Reaching that requires far greater certainty over the everyday cost of running an EV, particularly for businesses weighing up the cost of electrifying a fleet.
“Whether an employee has access to a driveway can have a major bearing on those costs. From October, the VAT gap between home and public charging will widen. This will leave businesses who rely on the public network facing higher headline prices and greater complexity around reimbursement and VAT recovery. The confirmed pay-per-mile tax will add another cost for businesses running electric cars, particularly those covering high mileages.
“Organisations with underused workplace or depot chargers could open them to neighbouring fleets at agreed rates. This would provide a more predictable alternative to the public network while helping site owners get more value from infrastructure they have already paid for.”
Melanie Lane, Chief Executive at Pod, said:
“Another major year-on-year increase in July and a market share now comfortably above one in four new registrations show we’re well beyond the tipping point. We’re seeing underlying demand translate into sales as more consumers and businesses recognise the long-term cost and convenience benefits of driving electric. Nurturing that demand and making those benefits clear, rather than weakening commitments, is what will keep the UK ahead of its ZEV mandate trajectory. The Government’s VAT cut on household electricity is another positive step but now is the time be ambitious, back the mandate and support investment the UK’s electric future.”
Ian Smith, Automotive Partner at EY, said:
“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.”
“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.”
Image courtesy of Green Car Guide
