The U.K.’s automotive industry cannot continue “hemorrhaging billions” of British pounds in electric vehicle discounts to prop up regulators’ demands for zero-tailpipe-emission cars.
That’s the ever-louder warning from its representative body, the Society of Motor Manufacturers and Traders, despite reporting an 11.7% rise in new-vehicle registrations for July, the market’s best performance since 2019.
Its data shows 156,571 units were sold compared to 140,154 for the same month in 2025, the SMMT’s Aug. 5 release reported.
And EV registrations drove the uptick, recording a 44.5% hike and rebounding from a subdued July 2025, with demand driven by model choice thanks to tariff-free imports from China, heavy automaker discounting and government incentives.
However, SMMT chief executive Mike Hawes repeated previous warnings that the discounts automakers are implementing in a bid to approach mandated targets are not sustainable for the nation’s auto industry.
“July’s record EV performance is a great achievement, reflecting industry’s huge investment in zero-emission mobility,” Hawes said in a statement. “But that progress cannot be sustained if manufacturers continue hemorrhaging billions in EV discounts, distorting demand to avoid even steeper penalties.”
SMMT reports its latest industry outlook expects 2.18 million new-car registrations for the full-year 2026 with BEVs accounting for 27.4% of all sales, which is still significantly short of the 33% target mandated by current government regulations.
Vehicle demand grew across all sectors, with private buyer uptake rising 12.6%, fleet deliveries up 9.5% and the lower-volume business segment up 61.3%.
Growth was aided by electrified vehicle uptake, with plug-in hybrids up 33.6% to take a 14.9% share of the market, and hybrids up 11.6% to account for 13.2%.
EV registrations achieved record volume for the month compared to July 2025 when buyers delayed switching until confirmation of full model eligibility for the government’s Electric Car Grant incentive program.
Longer term, SMMT said EV share is expected to rise to 32.1% in 2027 against a mandated target of 38%.
While mandate flexibilities are helping bridge some of the gap between natural demand and ambition, they do not come without cost and their value will diminish as targets accelerate, the SMMT added. The shortfall continues to be addressed by significant discounting, marketing and other fiscal support from industry and government — costs which are causing manufacturers to pause or even divert investment while weakening residual values, damaging profitability and costing jobs.
“A sustainable transition will not happen merely by compelling supply when underlying demand is not keeping pace despite year-on-year growth,” said Hawes. “We need urgent reform of the regulation, else Britain risks undermining its competitiveness and the jobs and livelihoods that depend on this industry.”
Analyst view
While welcoming the U.K.’s July data, Ian Smith, automotive partner at EY, said in an emailed comment to WardsAuto that the nation’s auto industry still has challenges to face over competitiveness.
“Despite these green shoots, original equipment manufacturers continue to face a challenging trading environment, with regulatory targets and stiff competition from Chinese OEMs, which have introduced large volumes of affordable BEVs to the UK market in recent months,” said Smith.
As EV adoption continues to grow, he said, sustainable demand will increasingly depend on the broader ownership ecosystem rather than the vehicle alone, including charging solutions, financing, connectivity and lifecycle support.
“As the more profitable channel, growth in retail sales remains a critical priority for original equipment manufacturers, so the further increase seen in July is welcome news,” Smith said. “However, with economic growth prospects remaining subdued, the challenges still facing the sector should not be underestimated.”
