The UK new car market grew 11.7% in July to reach 156,571 registrations, according to the latest official figures – the strongest July since 2019 and marking the eighth consecutive month of market growth.
Battery electric vehicle registrations increased 44.5% to deliver a record July volume and a 27.5% share of the new car market.
Even so, the Society of Motor Manufacturers and Traders (SMMT) expects BEVs to account for only 27.4% of registrations during 2026, compared with the 33% share required under the ZEV mandate.
Private and fleet demand grows
Private registrations rose 12.6% in July, while fleet deliveries increased 9.5% while fleet buyers accounting for 59.9% of all new car registrations, maintaining their position as the largest part of the market. The lower-volume business sector recorded growth of 61.3%.
Electrified vehicle demand provided much of the overall market uplift. Plug-in hybrid registrations increased 33.6% and achieved a 14.9% share, while hybrid volumes rose 11.6% to take 13.2%.
The SMMT said the sharp year-on-year increase also reflected a subdued July 2025, when some customers delayed purchases while awaiting confirmation of Electric Car Grant eligibility.
BEVs remain below 2026 target
The latest SMMT forecast predicts that the total UK new car market will reach 2.18 million registrations in 2026.
BEVs are expected to secure a 27.4% share, an improvement on the 26.8% forecast published in April but still well below the 33% ZEV mandate requirement.
The forecast gap is expected to continue into 2027, when BEV market share is predicted to reach 32.1% against a target of 38%.
The outlook incorporates manufacturer forecasts submitted before demonstrator and courtesy cars became ineligible for the Electric Car Grant in mid-July.
These vehicles represent around 10% of BEV registrations, while approximately one third of the battery electric market is supported by the grant. The SMMT warned that the eligibility change could put further pressure on future registrations.
It said manufacturers were spending heavily on discounts and marketing support to bridge the gap between consumer demand and regulatory requirements and warned that this support was putting pressure on profitability, residual values, jobs and investment.
Mike Hawes, chief executive of the SMMT, 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.”
Industry questions demand drivers
Automotive industry leaders have welcomed July’s 11.7% increase in new car registrations but warned that electric vehicle growth remains dependent on incentives, affordable finance and stable government policy.
Sue Robinson, chief executive of the National Franchised Dealers Association, said the results were “a welcome sign of resilience in the market”, reflecting the work of franchised dealers to support customers.
While welcoming growing consumer demand for EVs, she renewed the NFDA’s call for the government to review the ZEV mandate, which she said was “unnecessarily distorting the market”. Robinson added that policy certainty remained essential for manufacturers and retailers making long-term investment decisions.
Ian Plummer, chief customer officer at Autotrader, said competition between manufacturers was improving affordability and drawing consumers back into the market.
“For the first time, one in every two new car enquiries on Autotrader in July went to a plug-in car, showing that they are now a mainstream choice for UK car buyers,” he said.
With overall new car enquiries almost a third higher year on year, Plummer said the market could maintain its momentum and potentially achieve double-digit growth during the second half of 2026.
Ian Smith, automotive partner at EY, described eight consecutive months of growth as a significant achievement against a difficult economic and geopolitical backdrop.
“Last month’s market share of 30% was the highest it has ever been,” he said of BEVs, although this remained below the 33% ZEV mandate target.
Smith warned that manufacturers continued to face regulatory pressure and growing competition from Chinese brands and that future EV demand would increasingly depend on “charging solutions, financing, connectivity and lifecycle support, rather than the vehicle alone”.
Philip Nothard, insight director at Cox Automotive, said July demonstrated “both the strength and complexity of the UK’s automotive recovery”.
He welcomed resilient demand and rising EV registrations but warned that the market remained behind the trajectory needed to meet mandate targets comfortably.
“As we approach September, the key question is whether current EV momentum reflects sustainable demand or continues to rely heavily on incentives and industry support,” Nothard said.
John Cassidy, managing director at Close Brothers Motor Finance, said the figures provided “further encouragement for the motor industry”, despite inflation and pressure on household budgets.
He said finance remained central to sustaining registrations, adding: “For this trend to continue, manufacturers and retailers must continue delivering flexible options to sustain buyer confidence.”.
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