In December, fleet and business vehicle registrations rose 2.6%, to 1,194,545, and 8.8%, to 46,388, respectively, according to the Society of Motor Manufacturers and Traders (SMMT).
The UK new car market grew for the third year in a row in 2025, breaching the two million mark for the first time since the pandemic, with 2,020,520 new car registrations.
Repeating a pattern seen in previous years, battery electric vehicle (BEV) registrations took 32.2% of the market in December – the only time the ZEV mandate target of 28% was exceeded in 2025.
Uptake in December rose by 3.9% to 146,249 units, with a final increase in the private buyer market, up by 16.0%.
As a result, last year’s market rose by 3.5%, with growth across all buyer types.
Demand from private buyers recovered slightly from 2024 – when uptake fell below levels last seen during 2020 – with a 4.5% increase to 779,587 units, but still only comprising 38.6% of registrations.
Electrified vehicles narrowly missed becoming the majority of the market despite a surge during the last quarter.
Hybrid electric vehicle (HEV) volumes rose by 7.2% to achieve a 13.9% market share, while plug-in hybrids were the fastest growing powertrain, with volumes increasing 34.7% to take 11.1% of registrations.
Meanwhile, 473,348 new BEVs were registered during 2025 – more than in the whole of 2021 and 2022 combined.
This volume, which is likely to place the UK as the second biggest EV market in Europe by volume, saw BEV market share rise to reach 23.4% – a strong uplift, but with a mandate target of 28%, the SMMT said the gap between demand and ambition is increasing rather than diminishing.
Manufacturer investment now provides a choice of more than 160 BEV models – up from just over 130 at the start of 2025 – with at least 60 more due in 2026. However, EV uptake rose by only 23.9%.
The long-awaited return of a grant for EV purchase helped, according to the SMMT, although only around a quarter of models are currently eligible for the incentive at any level.
Manufacturers continue to shoulder the burden of driving up demand, subsidising their sales by more than £5bn in 2025, equivalent to £11,000 per BEV registered.
The SMMT said such subsidies are unsustainable, and that the announcement of a new ‘eVED’ tax on EVs purchased from 2028 sends a confusing message to consumers, undermining rather than encouraging market confidence.
While average new car CO2 fell by 10.1% from 2024 to 91.8 g/km, which will assist some manufacturers with mandate compliance, the UK’s zero emission sales target will next year require BEVs to comprise one in three new car registrations.
The UK already has the most ambitious transition trajectory of any major market, and, with the EU’s proposal to revise its end-of-sale date from 2035, the divergence between the UK and the much larger market on its doorstep is widening.
The SMMT called on the Government to ensure the British market remains attractive for investment, one that supports consumers, the industry, and the economy.
The forthcoming review of the ZEV Mandate will be an opportunity to ensure the transition supports the UK’s international competitiveness and prosperity, as well as its shared decarbonisation goals.
Mike Hawes, chief executive of the SMMT, said: “The new car market finally reaching two million registrations for the first time this decade is a reasonably solid result amid tough economic and geopolitical headwinds.
“Rising EV uptake is an undoubted positive, but the pace is still too slow and the cost to industry too high.
“Government has stepped in with the Electric Car Grant, but a new EV tax, additional charges for EV drivers in London and costly public charging send mixed signals.
“Given developments abroad, government should bring forward its review and act urgently to deliver a vibrant market, a sustainable industry and an investment proposition that keeps the UK at the forefront of global competition.”
Reaction:
Ian Plummer, chief customer officer at Autotrader:
“In the UK, we could be getting close to the tipping point on electrified vehicles, as nearly half of all new cars sold last year were electric or hybrid – and pushing overall sales past the 2 million mark.
“Drivers now have more choice of models than ever before and a declining EV price premium thanks to the industry’s efforts, but if we are going to reach ever-tougher targets under the ZEV mandate we still need to do more to encourage demand.
“That should include broadening the range of models eligible for Electric Car Grants and cutting the cost of public charging.”
Vicky Edmonds, CEO at EVA England:
“It’s been another strong year for EVs as nearly 1 in 4 went full electric, and over a third in December alone.
“This shows that confidence is growing and support measures are working. It is crucial now that we build on this progress and ensure all drivers are properly supported to make the switch.
“This can be done by expanding reliable, affordable and accessible charging, supporting the used EV market, and ensuring incentives reach everyday drivers.”
Philipp Sayler von Amende, global chief commercial officer at Carwow:
“The return of the new car market to over two million registrations in 2025 is very welcome news.
“Our own enquiry data suggests that the upturn in sales reported by the SMMT is set to continue into the first quarter of 2026.
“We shared 21% more new car enquiries with our dealer partners in December than in the same month last year.
“Demand for electric vehicles (EVs) and hybrid models continued to grow, with enquiries increasing by 36% and 40%, respectively, compared to the final month of 2024.
“Data for the full year showed an overall growth of 11%, with enquiries for EVs and hybrids increasing by 60% and 32%, respectively, over 2024 figures, further cementing our prediction that EVs will level with internal combustion engine vehicles for market share in 2026.
“These figures indicate that consumer intent to switch to electric remains strong, despite the announcement of a new pay-per-mile tax scheme in 2028.”
Melanie Lane, chief executive at Pod:
“Every year the EV sector faces new hurdles and yet every year it continues to deliver record figures.
“Registration data shows an industry on track to meet end-of-year targets for 2025, thanks to record BEV sales and further sales of low emission vehicles.
“With drivers and industry both playing their part, it’s critical that Government resists any urge to revisit the ZEV mandate that has supported major investment in UK electrification so far.
“Many more drivers will make the switch to an EV this year, especially with the Electric Car Grant in full flow, but sustaining progress in the transition and converting consumer affordability into long-term sector growth will depend on a consistent policy approach, lower energy costs, and a clear focus on building confidence in 2026.”
Helen Thorne, spokesperson for the Leasing Broker Federation:
“Full-year figures showing a 3.5% rise in new car registrations point to a gradual but meaningful recovery in the market, with demand strengthening as the year progressed.
“While volumes remain below pre-pandemic highs, the direction of travel is positive and reflects growing confidence from both private motorists and businesses.
“As we enter 2026, this modest but consistent growth provides a stronger platform for the year ahead.
“With supply conditions continuing to stabilise and affordability firmly in focus, leasing brokers will remain central to supporting further progress and helping translate improving sentiment into registrations.”
John Cassidy, managing director at Close Brothers Motor Finance:
“December 2025 saw a year-on-year rise in new registrations, bringing to an end a mixed year for the industry which saw a 3.5% growth in 2025.
“Following the impact of the Budget late in November, which ended uncertainty over the effects of tax policy on the industry, this latest data will spark hope that momentum is being built going into 2026.
“More competitive deals, and a wider range of new car models have been helping to increase consumer confidence and lead to more positive numbers, which will provide a boost to manufacturers.
“The effects of the Budget will not go unnoticed, however. Rises in tax will continue to pressurise personal finances, and a direct pay-per-mile tax on electric vehicles (EVs) may well dent appetite for EVs at a time where incentives are needed to encourage uptake.”
Sam Wilson, expert at Compare the Market:
“For motorists weighing up their next vehicle, the total cost picture is set to become more nuanced – and some may take a closer look at how incentives and operating costs balance out over time.
“Over the past year, the running cost gap between driving electric and petrol cars has been shrinking – with EV costs rising and petrol costs falling.
“Despite this, EVs continue to offer a lower day-to-day cost profile overall. Alongside lower upfront costs, motorists driving certain EV models included in the Government’s new Electric Car Grant scheme could also benefit from the lower insurance premiums typically associated with EVs, further reducing annual running costs.”
