April witnessed a 10% decrease in new vehicle purchases due to a doubling of automobile tax levies, impacting buyers negatively.
April 2025 saw a drop in new car sales, with a 10.4% decline recorded by the Society of Motor Manufacturers and Traders (SMMT). This slump follows a fragile economic backdrop and weakened consumer confidence, as highlighted by the SMMT. The market suffered a loss of nearly 14,000 cars compared to April 2024. This downward trend extends to April 2019 registrations, with sales falling by a quarter.
The primary culprit behind this sales plummet appears to be the new, doubled Vehicle Excise Duty (VED) rates that kicked in on April 1. Known as the Chancellor's tax raid on motorists, this update affects both new and existing electric vehicles, as well as EV owners who now have to pay VED for the first time. Ever-popular luxury hybrid EVs will now be subject to an expensive car supplement (ECS) of £425 per year over a five-year period.
Despite this tax sting, demand for electric cars showed an 8.1% increase in April. Battery electric vehicles still only accounted for 20.4% of all registrations, well short of the Zero Emission Vehicle (ZEV) Mandate requirement of 28%. However, the ZEV Mandate now includes hybrid sales, helping to meet the annual threshold.
Mike Hawes, SMMT chief executive, described April's performance as "disappointing but expected after March's surge." The surge mentioned by Hawes likely refers to the busy March plate change period. Hawes also noted that more recent government adjustments to the ZEV Mandate have eased some market pressure and helped manufacturers.
The drop in sales was exacerbated by a few other factors, such as the late timing of Easter and a reduced number of working days, making it challenging for dealerships to sell new models to customers. However, experts agree that the main cause of the sales decline is the Chancellor's tax overhaul, which has left many motorists feeling the pinch.
- The disappointing sales drop in April 2025's automotive industry, as reported by the SMMT, can be attributed to a variety of factors.
- The new doubled Vehicle Excise Duty (VED) rates implemented on April 1, 2025, often referred to as the Chancellor's tax raid on motorists, contributed significantly to this slowdown.
- This update affects not only new cars but also existing electric vehicles and first-time EV owners.
- Luxury hybrid electric vehicles now face an expensive car supplement (ECS) of £425 per year for a five-year period due to the new VED rates.
- Remarkably, despite the higher taxes, there was still an 8.1% increase in demand for electric cars in April.
- However, electric vehicles only represented 20.4% of all car registrations in April 2025, falling short of the Zero Emission Vehicle (ZEV) Mandate requirement of 28%.
- The ZEV Mandate's recent revision, which now includes hybrid sales, has offered some relief to the industry by helping manufacturers meet the annual threshold.
- Finance, transportation, and lifestyle news sources have reported the slump in new car sales as a result of the Chancellor's tax overhaul, leaving many car-owners feeling the pinch.
- Additional factors, such as the late Easter timing and reduced working days, have also played a role in the difficulty car-dealers have faced this year.
