New Car Sales Decline in July as Buyers Seek Electric Car Grant Clarity

The UK automotive market experienced a 5% decrease in new car registrations in July compared to the same month last year. This dip in sales can be attributed to a slowdown in the electric vehicle (EV) market, as consumers are holding off on purchases pending clarity regarding which electric cars will qualify for new government subsidies.

In July, approximately 140,000 new cars were registered, marking a pause in growth that had persisted over the previous two months. However, there is optimism within the industry, as further announcements regarding government and manufacturer-backed incentives for EVs are expected to boost sales. Analysts project that the UK will record 1.9 million car registrations by 2025, provided consumer interest resumes.

Slowdown in Electric Vehicle Sales

Sales of electric vehicles saw a marked slowdown in July, with registrations for pure EVs increasing by 9.1%, totaling 29,825 units. While this is an improvement compared to last year, it falls short of the 34.6% growth seen in the first half of 2025, making July one of the weakest months for electric car registrations this year. The Society of Motor Manufacturers and Traders (SMMT) attributed this downturn to uncertainty surrounding the new Electric Car Grant (ECG), which can offer discounts ranging from £1,500 to £3,750 for certain models priced under £37,000.

The initial models confirmed to receive the ECG include Citroën's ë-C3, ë-C4 variants, and the new ë-C5 Aircross, all benefiting from immediate reductions of £1,500 at point of sale. The SMMT emphasizes that detailed information on eligible models is pivotal for rekindling consumer interest, particularly as electric vehicles currently hold only 21.3% market share, far below the 28% target required by 2025.

Manufacturer Discounts to Drive Sales

As buyers await further announcements regarding the ECG, many manufacturers have proactively reduced prices to encourage sales. Brands like Alfa Romeo, MG, Volvo, and Smart have introduced significant discounts on their sub-£37,000 EVs, making the vehicles more attractive to potential buyers. Some models, including the Leapmotor C10 and Hyundai Inster, are now available with discounts as high as £3,750.

SMMT CEO Mike Hawes noted that July's figures highlight the market's vulnerability to external factors and the need for clear communication regarding available incentives. He expressed optimism that confirming grant eligibility and introducing compelling manufacturer discounts would stimulate demand and encourage consumers to switch to EVs, benefiting the car industry as well as environmental initiatives.

Market Trends and Future Predictions

Despite the slowdown in EV sales, the SMMT projects this decline to be temporary. By the end of the year, EVs are expected to account for 23.8% of the UK’s projected 1.9 million new car registrations. Overall, sales of hybrids also fell by 10%, while demand for diesel vehicles continued to decline by 7.9%, totaling just 8,000 sales in July. In contrast, registrations for plug-in hybrids surged by 33% to 17,489 units, capturing 12.2% of the UK market, with predictions suggesting they may soon outpace traditional hybrids.

While business registrations saw a minor increase, they remained significantly lower than the 3.2% and 6.5% declines in private and fleet registrations, respectively.

In conclusion, as the automotive industry navigates sales challenges amid shifting consumer preferences and evolving grant structures, clear communication and attractive incentives will play critical roles in revitalizing the market for new vehicles.