Robust fleet and private buyer demand alongside a huge surge in EV uptake have propelled the UK new car market to its best July performance since 2019.

The latest figures from the Society of Motor Manufacturers and Traders (SMMT) reveal an 11.7% growth spurt, with 156,571 new vehicles registered last month.

Although compared with a relatively weak July last year, the performance marks an eighth consecutive month of growth as the market continues its longer-term recovery towards pre-Covid levels.

Demand grew across all sectors, with private buyer uptake rising 12.6%, fleet deliveries up 9.5% – representing six in 10 (59.9%) registrations – and the lower-volume business segment up 61.3%.

Battery electric vehicle (BEV) registrations continued their significant upward trajectory last month, with a notable 44.5% year-on-year increase. This resulted in a year-to-date market share of 27.5%. That’s down on last month’s unprecedented 30.0% market share but up from 21.3% a year ago.

Plug-in hybrids rose 33.6% to take a 14.9% share of the market, while hybrids were up 11.6% to account for 13.2%.

In contrast, petrol fell 5.2% and saw its share fall to 40.1% from 47.3% a year ago, while diesel’s demise continued with a 17.7% slump in registrations and just a 4.2% market share.

Top-selling models for July were led by the Ford Puma, Nissan Qashqai and Kia Sportage. The leaderboard for battery electric vehicles was topped by the Renault 5, Kia EV3 and Jaecoo E5.

Across the year to date, battery electric vehicles now command a 25.3% share. The latest industry outlook now expects BEVs to reach 27.4% of a 2.18 million-strong market by year end. That’s up from a 26.8% share in April’s outlook but still far short of the 33% official ZEV mandate target. Longer term, BEV share is expected to rise to 32.1% in 2027 against a target of 38%.

The outlook reflects manufacturer views submitted prior to the end of Electric Car Grant (ECG) eligibility for demonstrator and courtesy cars in mid-July. Given these vehicles currently account for around 10% of BEV registrations, and around four in 10 BEV registrations are delivered by ECG-eligible models, the SMMT said the change could impact future performance.

The industry body warned again of the gap between BEV registrations and the ZEV mandate target of 33%. Independent analysts argue the headline 33% figure is widely misunderstood. Built-in flexibilities – such as pooling credits from low-emission hybrids – lower the car industry’s real 2026 EV compliance target to 24.6%, according to calculations by New Automotive.

But the SMMT said that while mandate flexibilities are helping bridge some of the gap between natural demand and ambition, they do not come without cost and their value will diminish as targets accelerate.

“The shortfall continues to be addressed by significant discounting, marketing and other fiscal support from industry and government – costs which are causing manufacturers to pause or even divert investment, while weakening residual values, damaging profitability and costing jobs,” the industry body stated.

Mike Hawes, SMMT chief executive, said 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.”

Sustaining the EV momentum

Philip Nothard, insight director at Cox Automotive, said the July figures highlight both the strength and complexity of the UK’s automotive recovery.

“Demand remains resilient, and the continued growth in EV registrations is a positive step towards decarbonisation. However, the market is still falling short of the trajectory required to meet ZEV mandate targets comfortably. Economic stability appears to be supporting consumer confidence, even if higher borrowing costs and cost-of-living pressures remain. 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.”

EV charging management firm Vaylens spotlighted the new car market’s heavy reliance on fleet demand and said that bridging the ZEV mandate gap requires greater cost predictability for businesses considering fleet electrification.

Russell Olive, UK director, commented: “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.”

Paul Hyne, transport commercial director at Lloyds Banking Group, also said that fleets were doing much of the ‘heavy lifting’ on BEV take-up in volume, with private buyers steadily following as more affordable models reach the market and running-cost fundamentals showing significant value in going electric.

“The shift in the affordability picture is striking,” he continued. “Used EVs are broadly at parity with, if not cheaper than, their petrol equivalents on price and the second-hand market grew by around a third in the first quarter alone. As more ex-fleet vehicles filter through over the rest of the year, that growing pool of well-priced used stock is what will bring more drivers into electric vehicle ownership.”

Ian Smith, automotive partner at EY, said that 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.

Smith also noted the rise in fleet sales across July but added: “With economic growth prospects remaining subdued, the challenges still facing the sector should not be underestimated.

Data from Carwow suggests that rumours surrounding potential changes to the ZEV mandate are starting to impact consumer confidence.

James Pollard, VP dealer & growth retention, commented: “More than half (57%) of respondents to our survey said the potential changes have left them ‘less confident’ about which type of car to buy next, while a similar proportion (52%) said the uncertainty makes them ‘more likely’ to delay their next purchase, even though the proposed reforms would be a change to manufacturing and sales targets, not consumer incentives.”

Colin Walker, head of transport at the Energy & Climate Intelligence Unit (ECIU), countered that. With BEV prices falling and sales rising, Walker said arguments to weaken the ZEV mandate 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.”