UK new car market rebounds in May as EV discounts fuel growth

The UK’s new car market returned to growth in May, with registrations rising by 1.6% to 150,070 units, according to the Society of Motor Manufacturers and Traders (SMMT). This marks the market’s strongest May since 2021 and only the second month of growth this year. However, volumes remain 18.3% below pre-pandemic levels in 2019, underscoring continued economic uncertainty and fragile consumer confidence.

Growth was largely driven by fleet and business buyers, with registrations up 3.7% and 14.4% respectively. Combined, these segments accounted for nearly two-thirds (62.6%) of all new registrations. In contrast, private sales declined for the second consecutive month, falling by 2.3%.

Petrol and diesel vehicle sales both saw double-digit declines, down 12.5% and 15.5% respectively. In contrast, demand for electrified vehicles surged, with hybrid electric vehicles (HEVs) up 6.8%, plug-in hybrid electric vehicles (PHEVs) soaring by 50.8%, and battery electric vehicle (BEV) registrations rising 25.8% to secure a 21.8% market share.

Ian Plummer, Commercial Director at Auto Trader, said: “Despite recent geopolitical volatility, the fundamentals of the car market remain sound and the sharp rise in electric vehicle sales against last year demonstrates real momentum.

“Electric demand is being driven by new affordable models like the Renault 5 and the Hyundai Inster, along with fast growing Chinese brands like BYD and OMODA-JAECOO, which will be key to mass market adoption. Around one in four of all new cars viewed on our website is electric and we know that when the price is right, drivers are keen to make the switch.”

Despite this momentum, BEVs still lag behind government targets. Year-to-date, BEVs make up just 20.9% of the market – well short of the 28% mandated by the UK’s Zero Emission Vehicle (ZEV) Mandate. Manufacturers continue to rely heavily on incentives and discounts to stimulate demand, raising concerns about the long-term sustainability of the market.

SMMT Chief Executive Mike Hawes emphasized the need for stronger government support:

“A return to growth for new car registrations in May is welcome, but manufacturer discounting on new products continues to underpin the market, notably for electric vehicles. This cannot be sustained indefinitely as it undermines the ability of companies to invest in new product development.”

The SMMT is urging the government to introduce targeted fiscal measures in the upcoming Spending Review to accelerate EV adoption. Proposed actions include halving VAT on new EVs, removing electric vehicles from the VED Expensive Car Supplement, and standardising VAT rates for public and home charging. According to the SMMT, these steps could put an additional 267,000 EVs on the road over the next three years and cut CO2 emissions by six million tonnes annually.

With manufacturers committing billions to zero-emission technologies, the industry says it’s time for policymakers to match that ambition and help drive the transition.