UK new car market surpassed two million registrations in 2025

The UK new car market surpassed two million registrations in 2025 for the first time since the pandemic, marking a third consecutive year of growth and underscoring the sector’s ongoing recovery. New figures from the Society of Motor Manufacturers and Traders (SMMT) show registrations rose 3.5% year on year to 2,020,520 units.

December delivered a strong finish, with registrations up 3.9% to 146,249 units. Private buyers drove much of the momentum, lifting their registrations by 16.0% in the final month. Battery electric vehicles (BEVs) also enjoyed a surge, taking 32.2% of the December market – the only point in 2025 at which the government’s 28% Zero Emission Vehicle (ZEV) mandate target was surpassed.

Despite growing interest in electrified technologies, internal combustion engines (ICEs) remained the largest powertrain category in 2025. However, their dominance narrowed significantly, with ICE vehicles accounting for just 51.5% of the market as demand for hybrids, plug-in hybrids (PHEVs) and BEVs continued to accelerate.

Across all buyer types – private, fleet and business – registrations rose. Private demand recovered modestly with a 4.5% increase to 779,587 units, though it still represented only 38.6% of the market. Fleet registrations were up 2.6% to 1,194,545, while business registrations rose 8.8% to 46,388.

BEVs saw an especially significant boost in 2025. A total of 473,348 electric cars were registered – more than in 2021 and 2022 combined – pushing BEV market share to 23.4%. This places the UK on track to become Europe’s second-largest EV market by volume.

But the growth was still not fast enough to match regulatory expectations. The 23.4% share fell short of the 28% mandated for 2025, widening the gap between demand and ambition. Manufacturers have expanded electric model choice substantially – offering over 160 BEV models, with at least 60 more arriving in 2026 – but EV uptake grew only 23.9% last year.

Much of the momentum has come at significant cost: carmakers subsidised EV sales by more than £5 billion in 2025, equating to around £11,000 per BEV. The government’s revived Electric Car Grant has provided some relief, though only a quarter of available models meet the eligibility criteria. Meanwhile, the planned eVED tax for EVs purchased from 2028 has sparked concerns that mixed policy signals could deter buyers.

Average new car CO₂ emissions fell 10.1% to 91.8 g/km in 2025, helping some manufacturers move closer to compliance. However, 2026 will require BEVs to make up one in three new car registrations, a steep escalation that risks placing the UK out of step with major global markets. The EU is already considering pushing back its 2035 combustion engine phase-out date, raising the prospect of divergence between the UK and its largest trading bloc.

The SMMT is urging government to bring forward its planned review of the ZEV Mandate to ensure the UK remains competitive, attractive to investors and aligned with long-term climate goals.

“Rising EV uptake is an undoubted positive, but the pace is still too slow and the cost to industry too high. Government has stepped in with the Electric Car Grant, but a new EV tax, additional charges for EV drivers in London and costly public charging send mixed signals.

“Given developments abroad, government should bring forward its review and act urgently to deliver a vibrant market, a sustainable industry and an investment proposition that keeps the UK at the forefront of global competition.”