The first week of February brings the start of a new year of monthly tasks – analysing the new car sales market and what needs to be done to either keep it growing or, as is the case this month, return it to growth.

Latest figures released by the Society of Motor Manufacturers and Traders (SMMT) show that the market fell by 2.5% to 139,345 units in January, the SMMT blaming weak consumer confidence and tough economic conditions for a fourth consecutive month of decline.

The decline was across both private and fleet sales, the latter having propped up the market, especially in terms of electric vehicle (EV) take-up, through much of 2024. Registrations slid by 3.7% and 0.5% respectively.

Battery electric vehicle (BEV) registrations continued their rapid growth, volumes up by 41.6% year on year to take a 21.3% market share. Hybrid electric vehicles (HEVs) and plug-in hybrids (PHEVs) also grew their market shares rise to 13.2% and 9.0% respectively.

Reacting to the figures the SMMT emphasised that BEV market share still remains short of the 22% target set by the Government for last year in its Zero-Emission Vehicle mandate, and even further behind the 28% requirement for 2025.

The SMMT pointed to “the gap between demand and ambition” as a reason why the current review of the mandate and associated Vehicle Emissions Trading Scheme is essential, and added that the review must deliver meaningful changes urgently, else there will likely be significant negative consequences for the market, industry and, potentially, the consumer.

The industry body has also joined the call, made earlier this week by leading fleet management specialist Alphabet, for changes to plans to include BEVs in the Vehicle Excise Duty ‘Expensive Car Supplement’ (ECS). From 5th April EV models costing more than £40,000 – the majority on the market – will incur an additional £3,110 tax bill over the first six years of ownership.

The SMMT argues that this change will impact both the new and used car markets, undermining the goal of a mass market transition and wants tax plans to be revised to ensure the system is fair and avoids dissuading those who want to buy an EV.

In its submission Alphabet accepted the ECS is justified but called for the EV rate to be initially for cars costing above £60,000, and then to be revised downwards as more affordable EVs come onto the market.

The threshold for the ECS – dubbed the ‘luxury car tax’ when launched – has remained unchanged at £40,000 since it was set eight years ago, the SMMT pointing out that at the time the overall market was 30% larger than today and BEVs barely featured.

The SMMT argues that with more than twice as many BEVs registered this January than in the whole of 2017, raising the eligibility threshold for EVs – or exempting them from the ECS entirely – would send the message that such cars are essentials, not luxuries, and ensure vehicle taxation remains fair and appropriate for today’s market conditions.

“January’s figures show EV demand is growing – but not fast enough to deliver on current ambitions,” said SMMT Chief Executive Mike Hawes, adding that affordability remains a major barrier to uptake, hence the need for compelling measures to boost demand, and not just from manufacturers.

“The application, therefore, of the ‘Expensive Car Supplement’ to VED on electric vehicles is the wrong measure at the wrong time – rather than penalising EV buyers, we should be taking every step to encourage more drivers to make the switch, helping meet government, industry and societal climate change goals,” Hawes added.

Further industry figures are emphasising the need for a change of tack by the Government. Philip Nothard, chair of the Vehicle Remarketing Association and Insight Director at vehicle marketing specialist Cox Automotive, believes the continuing cautious take-up of EVs among private buyers, in a time of economic uncertainty, highlights the pressing need for significant support and incentives to accelerate adoption.

Nothard pointed to new consumer data from Cox Automotive and Regit showing that 86% of drivers don’t think there are sufficient incentives to support EV adoption in the UK. “The industry has made significant investments to drive the shift, yet many consumers still need reassurance on affordability and infrastructure before switching,” he said.

Nothard too believes the upcoming tax changes could slow progress at a critical time. “A balanced approach to taxation and incentives will maintain momentum and ensure the UK remains on track for a successful transition to electrified mobility,” he said.

John Cassidy, Managing Director of Sales at Close Brothers Motor Finance, believes the upcoming imposition of vehicle excise duty for electric vehicle owners in April is an example of mixed signals from the Government. “With a developing charging infrastructure and widespread reservations on EVs’ range, it’s imperative that incentives for EV ownership are not neglected,” he said.

James Hocking, Managing Director of online car sales specialist AA Cars, believes consumer interest in greener vehicles is on the rise. “Our data reveals that over half of buyers in the market for a car this year are considering a more environmentally friendly option, whether a hybrid or fully electric vehicle,” he said.

“The price of the 20 most-searched-for EVs and hybrids on our platform dropped by 10% in Q4 2024 compared to the previous year, which suggests affordability is improving – however, it remains a potential barrier for some, with traditional petrol models still accounting for a significant share of private demand,” Hosking added, emphasising that continued support and investment will be crucial in helping manufacturers meet the Government’s ZEV Mandate.

One final bit of evidence that change is needed to boost EV take-up – the Kia Sportage tops the first top 10 cars listing of 2025, a table that includes not one bespoke EV…