Car sales drop after tax hike – EVs defy the trend

Just 120,331 new cars were registered last month – down 10.4% from April 2024, and more than 25% below pre-pandemic levels seen in April 2019, according to new data by the Society of Motor Manufacturers and Traders (SMMT).

Analysts say the drop was no surprise. Not only is April typically quieter following the March number plate change, but this year it was also shortened by the late Easter bank holiday.

Many car buyers also rushed to beat new car tax changes that took effect on 1 April – especially the ‘Expensive Car Supplement’ that now affects some electric vehicles (EVs) for the first time.

The result? A sales spike in March, followed by a sharp cooldown.

“April’s performance is disappointing but expected after March’s surge,” said Mike Hawes, SMMT chief executive. “Another month of growth for EV registrations is good news; however, demand remains well below ambition.”

Sales fell across the board – private, business, and fleet buyers all pulled back – with petrol and diesel vehicles seeing the steepest declines, down 22% and 26% respectively. Hybrid sales slipped slightly, while plug-in hybrid (PHEV) registrations surged 34%.

The table below shows the fuel types on the road in April this year compared to last year.

BEV – Battery electric vehicle; PHEV – Plug-in hybrid electric vehicle; HEV – Hybrid electric vehicle; Diesel and petrol figures include Mild hybrid electric vehicle (MHEV)

Electric cars continue to grow – but not fast enough

Battery electric vehicles (BEVs) were a rare bright spot, with registrations rising 8.1% to more than 24,500 units, securing a 20.4% share of the April market. That’s progress, but still short of the 22% target required under the UK’s Zero Emission Vehicle (ZEV) mandate for 2025, and well behind the 28% mandated for next year.

The government recently eased some of the pressure on carmakers by tweaking compliance rules for the ZEV mandate. But industry leaders say that’s not enough, warning that EV growth is being propped up by manufacturers offering steep discounts, which isn’t sustainable.

“There’s now a huge choice of EVs on the market – more than 130 models, including some at lower price points,” said Hawes. “But for consumers to truly embrace electric, they need more support.”

Calls for EV incentives grow

With EVs still carrying higher upfront costs than their petrol counterparts, the SMMT is calling for a package of government incentives to make the switch more appealing. Proposed measures include halving VAT on new EVs, scrapping the expensive car tax for electric models, and cutting VAT on public charging to match the rate paid at home.

Without those changes, the UK risks falling short of its green transport goals.

Looking ahead, the SMMT forecasts just under 2 million new cars will be sold in 2025, slightly higher than previously expected. However, EV market share is now expected to reach just 23.5% this year – a downward revision from earlier estimates and still shy of the government’s mandate.

The bottom line is that EVs are growing in popularity, but not quickly enough – and without more help from the government, both the market and the UK’s climate targets could stall.

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