Fleet and consumer new car demand fell in July as buyers delayed purchases to wait for the rollout of the new Electric Car Grant.

Registrations fell 5.0% to 140,154 units, marking the weakest market performance for the month since 2022 and some 10.8% lower than in pre-pandemic 2019, according to newly published figures from the Society of Motor Manufacturers and Traders (SMMT).

Fleet registrations were down 6.5% year-on-year to 85,594 units while sales to private buyers dropped 3.2% to 51,646 units. Registrations in the much smaller sub-25 business sector climbed 10.4% to 2,914 units.

Demand for plug-in hybrid electric vehicles (PHEVs) rose 33.0% and battery electric vehicles (BEVs) 9.1%, although the latter marked a big drop from the 34.6% increase recorded for the first half of 2025. A 21.3% market share for July and 21.5% year to date is also below the 28% for the UK’s ZEV mandate, although carmakers have flexibilities at their disposal.

Hybrid electric vehicle transactions declined 10.0% to 18,551 units. Diesel dropped a further 7.9% to 8,018 units, compared to 8,708 in June 2024, whereas petrol sank 14.7% from 77,702 units to 66,271 units and dropped its market share from 52.7% a year ago to 47.3%.

The SMMT said July’s fall in registrations was due to the newly announced Electric Car Grant (ECG). While the first models to qualify for the grant have been announced today, the full list of eligible model is yet to be confirmed, causing some buyers to hold off purchases pending confirmation of which vehicles will qualify.

Year-to-date, the overall market remains up 2.4% at 1.18 million units, including more than a quarter of a million BEVs, and July’s decline is expected to be temporary. The latest market outlook – undertaken before eligible ECG models were confirmed – was revised up to 1.9 million units for 2025, with BEV volumes revised up marginally too and expected to take a 23.8% share.

Mike Hawes, SMMT chief executive, said: “July’s dip shows yet again the new car market’s sensitivity to external factors, and the pressing need for consumer certainty. Confirming which models qualify for the new EV grant, alongside compelling manufacturer discounts on a huge choice of exciting new vehicles, should send a strong signal to buyers that now is the time to switch. That would mean increased demand for the rest of this year and into next, which is good news for the industry, car buyers and our environmental ambitions.”

Jon Lawes, managing director at Novuna Vehicle Solutions, also warned that the new EV grant, while welcomed by the sector, had caused confusion due to its rushed rollout and limited industry consultation.

“Manufacturers are scrambling to work out which models apply while consumers are left in limbo, wondering if they’ll actually get up to £3,750 in savings – risking a slowdown in demand, particularly in private sales, which continue to lag behind fleets. And excluding used EVs is a missed opportunity to improve affordability and buyer confidence.

“To sustain growth, we need clear, stable grant criteria, targeted support for used EVs, and a robust charging strategy for urban, rural, and fleet needs. With joined-up policy, better infrastructure, and clear consumer messaging, the UK can meet its net zero goals and make the switch to electric the obvious choice for all drivers.”

And Jamie Hamilton, automotive partner and head of electric vehicles at Deloitte, said: “The new electric car grant is a welcome incentive but more clarity around eligibility will be required for this to have its intended impact.

“Finding places to charge is still stopping many people from buying electric cars, particularly those without off-street parking. Right now, EVs are still a lot easier and cheaper to run if consumers have direct access to a driveway, so there is a need to level the playing field and make electric driving accessible for everyone. We’re beginning to see signs of a two-tiered market which risks leaving a significant portion of the population behind in the transition to EVs.”

Philip Nothard, insight director at Cox Automotive, said that the impact of the ECG remains unclear, but early price activity among manufacturers suggests it may help re-engage parts of the market and potentially trigger a price war.

“Meanwhile, private demand remains subdued due to economic pressures, and structural challenges, such as the ZEV mandate and infrastructure delays, continue to weigh on progress, as fleet remains the primary driver of volume. The remainder of 2025 will be critical in determining whether the ECG and broader incentives can generate a more meaningful shift in retail EV uptake.”

Finally, EY UK said the outlook was positive for the fleet market despite July’s fall in new car demand.

Maria Bengtsson, EY UK & Ireland mobility leader, said: “Fleet sales, which have encountered a more difficult year in 2025 following consistent growth last year, were down by 6.5% year-on-year in July. However, there appears to be scope for a return to growth across the remainder of the year as more businesses look to electrify their fleets, particularly considering the new EV grants on offer.”