Why Did UK New Car Sales Dip in July and What’s Behind the Slowdown?
If you’ve been keeping an eye on the UK car market, you might have noticed a surprising trend: new car sales took a 5% dip in July compared to the same month last year. That’s a notable shift, especially after two months of steady growth. So, what’s going on? The answer boils down to a mix of uncertainty around electric vehicle (EV) incentives and shifting consumer habits.
In July, about 140,000 new cars hit the roads—a decent number, but not enough to keep the growth streak alive. The main culprit? Many buyers hit pause, waiting for clearer information about which electric cars would qualify for the government’s new Electric Car Grant (ECG). This grant promises to knock either £1,500 or £3,750 off the price of certain EVs under £37,000, depending on a few criteria. But with details still emerging, plenty of would-be EV owners decided to hold off.
How Are Electric Car Sales Holding Up Amidst the Uncertainty?
You might expect that with all the buzz around EVs, sales would be surging. And for much of the year, that was true—pure electric vehicle registrations were up 34.6% in the first half of 2025. But July told a different story. While EV registrations did rise 9.1% year-on-year to nearly 30,000 units, this was a sharp slowdown and marked the second weakest month for EVs so far this year.
Why the sudden stall? It’s all about timing. With the government’s new grant program in the works, buyers wanted to be sure they’d get the best deal. No one wants to miss out on a big discount, after all. The Society of Motor Manufacturers and Traders (SMMT) pointed out that similar market distortions happened in April when car tax rules changed, causing another temporary dip.
Which Electric Cars Are Eligible for the New Grant—and Why Does It Matter?
The government has started to reveal which models will benefit from the ECG, and Citroën is leading the pack. Six of its models—the ë-C3, ë-C3 Aircross, ë-C4, ë-C4 X, ë-Berlingo, and the new ë-C5 Aircross—now qualify for the £1,500 discount at the point of sale. That’s a solid incentive for buyers on the fence.
But here’s the catch: more clarity is still needed. The SMMT stresses that buyers want to know exactly which cars are eligible before making a decision. Right now, battery-electric vehicles (BEVs) make up 21.3% of the new car market. That’s a healthy chunk, but still short of the 28% target manufacturers need to hit in 2025 under the zero-emission vehicle (ZEV) mandate. The message is clear: if the UK wants to meet its environmental goals, accelerating EV adoption is crucial.
How Are Car Makers Responding to the Waiting Game?
While the government finalizes its list, many manufacturers aren’t waiting around. Brands like Alfa Romeo, MG, Volvo, and Smart have already slashed prices on some of their sub-£37k EVs by £1,500, matching the lower grant level. Others, including Leapmotor, Hyundai, and GWM, are offering discounts up to £3,750 on select models.
This move isn’t just about generosity—it’s a strategic play to keep sales moving and avoid a backlog of unsold cars. For buyers, it means there are some genuinely good deals out there right now, even before the full grant program kicks in.
What Do the Latest Sales Figures Say About the UK Car Market?
July’s numbers paint a nuanced picture. While EV sales slowed, plug-in hybrids (PHEVs) are having a moment, with registrations up 33% to nearly 17,500 units. That’s about one-eighth of the market, and if the trend continues, PHEVs could soon outpace traditional hybrids.
Meanwhile, diesel’s decline hasn’t let up—sales dropped another 7.9%, with just 8,000 units sold. Petrol cars also saw a 14.7% decrease, though they still account for more than half of all new cars sold. Hybrids (excluding plug-ins) slipped by 10%.
On the business side, there was a slight uptick in company car registrations, but it was overshadowed by declines in both private and fleet sales. It’s clear that uncertainty is making everyone a bit more cautious.
What’s Next for UK Car Buyers and the Industry?
Industry leaders, like SMMT chief Mike Hawes, are urging the government to provide certainty as soon as possible. The thinking is simple: clear incentives plus attractive manufacturer discounts should send a strong signal that now’s a great time to make the switch to electric.
Looking ahead, the SMMT expects July’s slowdown to be a blip rather than a trend. Their forecast? EVs will make up 23.8% of the UK’s projected 1.9 million new car sales by the end of the year. That’s a step in the right direction, but there’s still ground to cover if the UK wants to hit its ambitious green targets.
What Should Buyers Do Right Now?
If you’re in the market for a new car, especially an EV, it’s worth keeping a close eye on both government announcements and manufacturer offers. Some of the best deals might be available right now, as brands compete for your attention and business.
The bottom line? The UK car market is in a state of flux, but that’s not necessarily a bad thing for buyers. With a bit of patience and research, you could land a great deal—while also helping push the country closer to its zero-emission goals. And that’s a win-win worth waiting for.