New car market starts 2026 with growth but EV share down

The UK’s new car market made a steady start to the year, with registrations rising by 3.4% in January to reach 144,127 units, according to the latest figures released last week by the Society of Motor Manufacturers and Traders (SMMT). It marks the strongest opening month since the pre‑pandemic period in 2020 and signals a market gradually regaining momentum after several challenging years.

Growth was evident across every buyer category. Private retail demand increased by 4.5%, fleet registrations edged up 1.6%, and although still a small part of the market, business registrations climbed an impressive 46.5%. Fleets continued to dominate overall activity, accounting for just over 61% of all new registrations.

Battery electric vehicle (BEVs) uptake, however, delivered only a marginal rise of 0.1%, reaching 29,654 units and taking a 20.6% share of the market — the lowest proportion recorded since April 2025. The subdued performance follows an unusually strong January last year, when many buyers brought orders forward to avoid the BEV tax changes introduced the following April. In addition, the end of 2025 saw manufacturers heavily promote electric models in a late push to meet regulatory requirements, a factor that inevitably softened demand in January.

Plug‑in hybrids proved to be the standout performers, posting a 47.3% increase and accounting for 12.9% of the month’s registrations. Hybrid electric vehicles also maintained their upward trajectory with a 4.8% rise, securing a 13.4% market share.

More optimistic picture
January is traditionally a lower‑volume month and not always a reliable indicator of full‑year direction. Even so, the latest market outlook suggests a modest but positive trend, with total registrations in 2026 expected to grow by 1.4% to 2.048 million units. This represents a more optimistic forecast than the one issued in October.

A broader model range, improvements in driving range and performance, and the government’s reintroduction of the Electric Car Grant have all contributed to a stronger outlook for BEVs this year. These vehicles are now predicted to account for 28.5% of the market in 2026. While this would be a clear step forward compared with 2025, it still falls short of the mandated 33% target — a gap that raises questions about the assumptions underpinning the mandate.

Manufacturers have invested billions in electrification and have supported the transition with significant discounts, while the UK’s charging network continues to improve. Yet demand is still lagging behind mandated expectations, suggesting that a reassessment of the transition strategy is becoming increasingly urgent. With the proposed introduction of eVED from 2028 expected to apply further pressure on demand, industry leaders are calling for government to take a more comprehensive view of the entire shift to zero‑emission mobility.

The SMMT’s CEO Mike Hawes said: “Britain’s new car market is building back momentum after a challenging start to the decade. It is also decarbonising more rapidly than ever and, despite a January dip in EV market share, the signs point to growth by the end of the year. The pace of the transition, however, may be slowing and is certainly behind mandated targets. With sales of new pure petrol and diesel cars planned to end in less than four years, there needs to be a comprehensive review of the transition now, to ensure ambition can match reality.”