The UK's new car sales surpassed 2 million units last year for the first time since the pandemic, partly driven by automakers offering discounts exceeding £5 billion (approximately $6.7 billion) on electric vehicles. Data released on Tuesday by the Society of Motor Manufacturers and Traders (SMMT) showed that new car registrations in 2025 grew by 3.5%, reaching 2.02 million units.

Within this total, sales of pure battery-electric models surged by approximately a quarter, capturing 23% of the overall market. This figure represents an improvement over 2024 but still falls short of the government's 28% electric vehicle sales target, missing the 2025 goal by 10 percentage points.

The growing popularity of Chinese cars helped propel UK car sales back above the 2 million mark, with their more affordable prices attracting consumers. Chinese manufacturers, including BYD and MG under SAIC Motor, continued to grow their market share last year, accounting for 9.7% of total UK car sales.

Chinese automotive brands are accelerating their entry into the UK market, with Chery and Geely commencing sales in the country last year. The UK is particularly attractive to Chinese brands as it has not followed the European Union's lead in imposing tariffs on Chinese-made electric vehicles.

Meanwhile, the increasing influence of Chinese brands is putting greater pressure on automakers from Japan, Korea, and parts of Europe. Additionally, these companies face pressure to meet electric vehicle sales targets, with potential fines of up to £12,000 per car for non-compliance, though they can avoid penalties through a credit trading system and other flexible arrangements.

Citing data from Jato Dynamics and Auto Trader, the SMMT stated that manufacturers' total discounts on electric vehicles last year exceeded £5 billion, equating to an average saving of around £11,000 per registered pure electric car. The industry lobbying group described this practice as "clearly unsustainable."

Despite the sales growth, last year remained challenging for the UK automotive industry. US tariff policies caused disruptions and ultimately increased costs for car manufacturers. Concurrently, Jaguar Land Rover suffered a severe cyberattack that impacted its production activities.

The UK's largest car manufacturer was forced to halt production for nearly six weeks, prompting the government to step in with a £1.5 billion emergency loan guarantee to assist struggling suppliers. In other developments, UK van production was impacted last year after Stellantis NV closed its Luton plant, contributing to a 10% decline in light commercial vehicle sales.