The UK automotive industry experienced its strongest February in 22 years, with over 90,000 new cars registered – a 7.2% increase compared to 2025. This growth signals a broader recovery in the sector, driven primarily by a notable surge in retail purchases. However, the electric vehicle (EV) market is showing signs of slowdown, raising questions about the pace of the transition to zero-emission vehicles.
Retail Demand Fuels Growth
Private buyers were the key driver behind February’s performance, with registrations increasing by 17.6% to exceed 35,000 cars. Fleet sales also contributed, rising by 2.8%, though business sales experienced a 12.7% decline. This mix indicates that individual consumer demand is currently outperforming corporate purchasing, which could be linked to broader economic trends and consumer confidence.
EV Market Share Drops Despite Increased Registrations
Despite a 2.8% increase in EV registrations, their market share fell to 24.2% in February, down from over 25% last year. This decline is partially attributed to a rush in EV purchases before the introduction of new tax rates in April 2025, and aggressive manufacturer incentives to meet Zero-Emission Vehicle (ZEV) mandates in late 2025. The industry body, SMMT, also points out that February’s shorter length can exaggerate percentage changes.
Looking Ahead: March as a Pivotal Month
The SMMT emphasizes that March, with its traditional number plate change, will be critical. The industry is currently at 22% year-to-date BEV market share, still short of the 33% target for 2026. Manufacturers have invested heavily in new models and discounts, further supported by government grants, yet buyer confidence may weaken due to plans for a pay-per-mile tax for EVs from 2028.
“A holistic review of the transition is needed urgently…circumstances have changed beyond expectation since the regulation was set.”
The data suggests that while overall car sales are rebounding, the EV transition faces headwinds. The combination of expiring incentives, shifting consumer behavior, and future tax policies presents a complex challenge for both automakers and policymakers. The March figures will be a vital test of whether the market can sustain momentum.
