UK new car registrations exceeded two million units in 2025 for the first time this decade, signalling a resilient performance for the automotive sector despite ongoing economic and geopolitical pressures, according to the Society of Motor Manufacturers and Traders (SMMT).
Total demand rose by 3.5% year-on-year, with growth driven in part by continued momentum in zero-emission vehicles (ZEVs). Battery electric vehicle registrations increased by 23.9%, supported by an expanding model range now exceeding 160 EV options.
However, EVs accounted for just 23.4% of the overall market, falling short of the 28% target set under the ZEV mandate. The SMMT said manufacturers had committed around £5bn in discounts to stimulate demand, raising concerns about long-term market sustainability.
While the reintroduction of the Electric Car Grant has provided some support, eligibility remains limited to around a quarter of models. The organisation also warned that mixed policy signals — including proposed changes to vehicle taxation and rising public charging costs — risk dampening consumer confidence and undermining industry investment.
The commercial vehicle market continues to face headwinds. New van registrations fell 10.3% in 2025, although electric van uptake rose by 36.2%. Despite this growth, electric vans remain below mandated targets, with manufacturers relying heavily on subsidies to drive adoption. HGV operators also face infrastructure and cost barriers, although the recent expansion of the Plug-in Truck Grant was welcomed by the industry.
Alongside decarbonisation, the SMMT highlighted ongoing investment in road safety technologies and welcomed the government’s newly announced Road Safety Strategy.
Looking ahead, the organisation said it would expand support for members in 2026 as the sector navigates regulatory pressures, infrastructure challenges and the transition to zero-emission transport.
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