New Car Market Sees Growth In May 2025 As Electric Vehicle Registrations Surge

Published: Thursday, June 5, 2025, 20:35 [IST]

In May 2025, the UK car market saw a 1.6% increase in registrations, reaching 150,070 units, as reported by the Society of Motor Manufacturers and Traders (SMMT). This marked the best performance for May since 2021, although it was still 18.3% lower than pre-pandemic levels in 2019. The growth was primarily driven by fleets and businesses, which saw increases of 3.7% and 14.4%, respectively.

Private buyer interest declined for the second month in a row, dropping by 2.3%. Petrol and diesel car deliveries experienced double-digit declines of 12.5% and 15.5%, respectively. However, electrified vehicle demand surged significantly, capturing a combined market share of 47.3%. Hybrid electric vehicles (HEVs) rose by 6.8% to reach 20,351 units.

Plug-in hybrid electric vehicles (PHEVs) saw a remarkable increase of over half at 50.8%, totalling 17,898 registrations. Battery electric vehicles (BEVs) also grew by 25.8%, making up 21.8% of the market share as manufacturers offered attractive incentives to boost sales.

Despite these gains, BEV registrations year-to-date have only achieved a market share of 20.9%, falling short of the mandated target of 28%. Significant discounting continues despite new model introductions and more affordable options becoming available.

The automotive sector is urging the government to introduce fiscal incentives to support this transition to zero-emission mobility. Suggestions include halving VAT on new EV purchases and removing EVs from the VED Expensive Car Supplement.

Equalising VAT on public charging with home charging rates could encourage more consumers to switch to electric vehicles now rather than later.

SMMT's Perspective on Market Growth

Mike Hawes, SMMT Chief Executive, stated that while growth in new car registrations is positive, ongoing manufacturer discounting is unsustainable as it affects investment in new product development crucial for decarbonising road transport.

He emphasised that next week's Spending Review presents an opportunity for the government to reinforce its Net Zero commitments through fiscal measures that stimulate demand and enhance competitiveness.

Diverse Vehicle Options Available

The latest data highlights the wide range of vehicle powertrains available due to sustained manufacturer investment in product development. Car buyers can now choose from over 135 BEVs, up from last year's count of 106.

Additionally, there are just over 100 PHEVs and nearly 50 HEVs available in the market today.

SMMT's Role in UK's Automotive Industry

The Society of Motor Manufacturers and Traders (SMMT) plays a crucial role in representing the UK automotive industry, which contributes £93 billion turnover and £22 billion value added to the economy annually.

This sector employs around 198,000 people directly in manufacturing and approximately 813,000 across related industries such as advertising and logistics.

Economic Impact of Automotive Sector

The automotive industry is vital for UK exports, accounting for 13.9% of total goods exports with over £115 billion generated from trade in automotive imports and exports globally.

The UK produces nearly every type of vehicle supported by more than 2,500 component providers and highly skilled engineers worldwide.

The UK automotive sector remains integral to economic growth and achieving net-zero goals while serving as a global trade hub with significant contributions from various regions outside London and South-East England.