The UK new car market returned to growth last month as demand for electric cars soared, but the industry says the discounting behind the uptick is unsustainable and the government must do more to support the switch.

The Society of Motor Manufacturers and Traders (SMMT) notes that it was the best May for new car registrations since 2021 but still 18.9% down on the same month in pre-pandemic 2019. It is also only the second month of growth so far in 2025, "reflecting brittle consumer confidence and economic turbulence".

The organisation attributed the uptick primarily to a surge in fleet registrations, which climbed 3.7% year on year to just over 90,000, accounting for a 60% market share.

Private car sales, meanwhile, were down 2.3% and accounted for 37.4% of the market - and while business registrations grew by a substantial 14.4%, they still made up only 2.6% of registrations.

It was another month of growth for electric cars, with nearly 33,000 units registered – a 25.8% yearly increase – accounting for 21.8% of the market. That's still far below the 28% EV sales mix that manufacturers must achieve this year under the ZEV mandate, but well above the 13.6% and 11.9% shares held by hybrids and plug-in hybrids respectively.

The SMMT says the rise in EV registrations comes off the back of the "attractive incentives" manufacturers are offering in a bid to drive uptake, although the organisation repeated its call for the government to "match this commitment with fiscal incentives".

Halving VAT on new EV purchases, the SMMT says, would put 276,000 new EVs on the road in the next three years, in place of ICE vehicles, resulting in an annual reduction in CO2 emissions of six million tonnes. 

It also said the government could "send a signal that now is the time to switch" to EVs by reducing the VAT on public charging and removing electric cars from the Expensive Car Supplement (ECS) - a move the government is understood to be considering already. 

While EV sales were up, diesel's decline continued with a huge 15.5% drop in registrations last month, taking oil-burners to just a 5.2% market share. And while petrol cars still make up nearly half of registrations, their sales were down a heavy 12.5%. 

SMMT chief executive Mike Hawes said: "A return to growth for new car registrations in May is welcome but manufacturer discounting on new products continues to underpin the market, notably for electric vehicles. 

"This cannot be sustained indefinitely as it undermines the ability of companies to invest in new product development – investments which are integral to the decarbonisation of all road transport. 

"Next week’s Spending Review is the opportunity for government to double down on its commitments to net zero by driving demand through fiscal measures that boost the market and shore up our competitiveness."