New car sales fell 5 per cent last month as motor industry bosses said Britons had ‘delayed’ purchases of electric vehicles as they awaited confirmation of Government-supplied discounts.
The Society of Motor Manufacturers and Traders (SMMT) on Tuesday confirmed that 140,154 new cars were registered in July, down from 147,517 on the same month in 2024.
Sales of new petrol, diesel and conventional hybrid cars all stalled, falling 15 per cent, 8 per cent and 11 per cent respectively.
And while plug-in hybrid registrations were up a third, growth in electric car demand eased to just 9 per cent year-on-year.
The SMMT pointed to the Government’s Electric Car Grant (ECG) announcement last month, which promises to slash the price of some new EVs by up to £3,750.
However, details of which models will be eligible for the scheme – and how much money will be knocked off their recommended retail price – has only started to filter through this week.
SMMT chief executive Mike Hawes blamed July’s ‘dip’ on consumer’s awaiting ‘certainty’ about which EVs are going to have their prices reduced.
Despite falling sales of other fuel types, EVs still only held a 21.3 per cent share of the new car market last month.
At least 28 per cent of new cars sold by each manufacturer in the UK this year are required to be electric under the Government’s Zero Emission Vehicle (ZEV) mandate.
With industry execs raising concerns about achieving the mandate’s annually increasing targets, ministers last month announced the return of EV purchase subsidies in the hope that reduced pricing will accelerate sales.
A £650million taxpayer-backed fund has been confirmed, which will see the grant scheme run until 2029, ministers have said.
However, car makers are currently still in the process of applying for eligibility to the ECG, which is only available to battery models priced under £37,000.
There are also additional stipulations in regard to qualifying for the scheme based on the emissions and sustainability of EV and battery production for each manufacturer.
Only the greenest-made electric models will be eligible for the full £3,750 allowance, while those that don’t quite meet the criteria will only be granted £1,500 off their RRPs.
Car makers that fall well short of the emissions requirements won’t receiving grants at all.
The first electric car models eligible for new Government grants were announced on Tuesday.
Drivers will be able to save £1,500 with the purchase of new Citroen e-C3, e-C4, e-C5 and e-Berlingo cars.
The scheme will enable motorists purchasing a new electric car to save either £1,500 or £3,750, depending on the vehicle’s sustainability.
SMMT chief executive Mike Hawes said: ‘July’s dip shows yet again the new car market’s sensitivity to external factors, and the pressing need for consumer certainty.
‘Confirming which models qualify for the new EV grant, alongside compelling manufacturer discounts on a huge choice of exciting new vehicles, should send a strong signal to buyers that now is the time to switch.
‘That would mean increased demand for the rest of this year and into next, which is good news for the industry, car buyers and our environmental ambitions.’
Jon Lawes, managing director at Novuna Vehicle Solutions, said the ECG’s ‘rushed rollout and limited industry consultation’ has caused major confusion for consumers and car makers alike.
‘Manufacturers are scrambling to work out which models apply while consumers are left in limbo, wondering if they’ll actually get up to £3,750 in savings – risking a slowdown in demand, particularly in private sales, which continue to lag behind fleets.
‘And excluding used EVs is a missed opportunity to improve affordability and buyer confidence.’
While brands including Abarth, DS, Fiat and Chinese maker Great Wall Motor will attribute July sales declines in the region of 40 to over 90 per cent on the grants decision, Tesla – which is not eligible for subsidies due to all its cars being over £37k – posted a huge 60 per cent fall in registrations last month.
It comes as the backlash against Elon Musk has seen sales of Tesla cars plummet across Europe in 2025.
The SMMT slightly upgraded its forecast for full-year new car registrations, to 1.9 million.
Registrations in 2024 reached 1.95 million.
EVs are forecast to hold a full-year market share of 23.8 per cent – more than 4 percentage points below the ZEV mandate’s requirement.
Sue Robinson, chief exec at the National Franchised Dealer Association, which represents hundreds of showrooms up and down the UK, said: ‘We expect electric vehicles sales to continue to increase as a result of the Government’s Electric Car Grant, however they remain someway off the ZEV Mandate targets for 2025.
‘Once the consumer has a clear understanding of the ECG and manufacturers have applied the grant discount of £3,750, an uptake in registrations should increase.’
Ian Plummer, commercial director at online vehicle marketplace Auto Trader, said the grant has provided a ‘much-needed boost’ for consumer interest in new electric cars, with EV consideration up 10 percentage points on Auto Trader.
But the unveiling of the initiative on July 14 explains why it was a ‘slow’ month for sales as buyers ‘wait to see just which models will get what level of grant’.
He added that discounts – either through the grant or by brands cutting prices themselves – will ‘trickle through to EV sales in the coming months’.
Also driving down sales last month was a 6.5 per cent fall in fleet registrations, while private purchases fell less significantly by only 3 per cent.
In terms of the most popular models, Ford’s Puma and Kia’s Sportage continue to dominate the market.
Over 4,400 examples of each were snapped up last month, extending their lead at the top of the 2025 sales charts.
