The UK new car market fell slightly in February, down -1.0% to 84,054 units, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).
In what is usually the smallest month of the year (accounting for only around 4% of annual volumes), February was the fifth consecutive month of decline, with a -4.0% reduction in fleet registrations – which have driven previous market growth. Private registrations rose by 4.6% to slightly increase overall market share to 35.6%, while the much smaller business sector rose by 3.3%.
Electrified vehicle uptake continued to grow, with plug-in hybrid vehicles (PHEVs) rising 19.3% and hybrid electric vehicles (HEVs) up 7.9%. Battery electric vehicle (BEV) registrations were up by 41.7% to 21,244 units, securing a 25.3% market share compared with 17.7% a year ago. This dramatic increase compared with the rest of the market was unsurprising considering the forthcoming tax changes in April, which will see many EV models subject to the vehicle excise duty expensive car supplement (ECS) for the first time. This maintains the positive trajectory but still falls short of the 28% target for 2025 and, given February comes ahead of the March numberplate change, it is always one of the smallest and most volatile months.
The SMMT noted that next month is likely to see a further surge in EV uptake, as buyers capitalise on the new ’25 plate and take their last chance to avoid the punitive ECS which, from 1 April will add £2,125 over six years to the cost of BEVs with a list price above £40,000. Relative to the rest of the market, BEVs are disproportionately affected as higher production costs meaning the average BEV retails above the ECS threshold, a threshold which remains unchanged since its introduction in 2017. The introduction of this measure also risks disincentivising the used market as well as the new, impeding a faster, fairer transition.
Manufacturers have already underwritten the transition to the tune of more than £4.5 billion in discounts over the last year alone – on top of the billions invested in developing and bringing the vehicles to market. Such industry support is unsustainable, according to the SMMT, which is why the current ZEV Mandate must arrive at measures which afford greater market flexibilities, incentivise private purchases, and both encourage and facilitate a faster rollout of charging infrastructure.
Mike Hawes, SMMT Chief Executive, said: “Although February’s figures show a subdued overall market, the good news is that electric car uptake is increasing, albeit at huge cost to manufacturers in terms of market support.
“It is always dangerous, however, to draw conclusions from a single month, especially one as small and volatile as February. With the all-important March number plate change now upon us, and tax changes taking effect in April that will, perversely, dissuade EV purchases, we expect significant demand for these new products next month – but, long term, EV consumers need carrots, not ever more sticks.”
“The new car market remains sluggish, with February seeing yet another drop in registrations. This ongoing downturn reflects shifting consumer preferences, economic uncertainty, and tighter regulations reshaping the motoring sector,” noted James Hosking, Managing Director of AA Cars.
“A key change ahead is the April increase in Vehicle Excise Duty (VED) on petrol and diesel vehicles, with the most polluting models facing tax hikes of up to £2,745. The policy aims to accelerate the transition to zero-emission motoring by making internal combustion engine (ICE) vehicles less financially appealing compared to EVs.
“Economic pressures continue to influence consumer decisions. While the Bank of England’s recent interest rate cut may ease car financing costs, stubborn inflation and the cost-of-living crisis are keeping some buyers on the sidelines.
“The used car market is thriving, driven by demand for more affordable alternatives. The growing availability of second-hand EVs and hybrids is giving budget-conscious buyers more options, further shifting demand away from new vehicles.
“March could bring a much-needed sales boost to new car sales, with the new 25-plate registration change. This biannual update often stimulates demand, particularly for fleet and company car buyers looking to upgrade before tax rule changes take effect.
“The UK car market remains in flux, with new car sales under pressure while used car demand surges. A combination of government incentives, improved EV infrastructure, and greater affordability will be key to sustaining momentum in the transition to electric vehicles while reviving confidence in new car purchases.”
