The UK’s new light commercial vehicle (LCV) market shrank by 12.1% in the first half of 2025, with June marking the seventh consecutive month of decline, according to the latest data published by the Society of Motor Manufacturers and Traders (SMMT). The drop to 156,048 units registered between January and June represents the sector’s weakest first-half performance since 2022, amid ongoing economic uncertainty and reduced business confidence.
June alone saw a 14.8% year-on-year fall in new LCV registrations, driven primarily by reduced demand for large and medium vans. Registrations of vans weighing between 2.5 and 3.5 tonnes fell by 14.8% to 99,790 units, while medium-sized vans declined by 20.9% to 26,408. The 4×4 segment also fell by 6.0%. Small vans were the only category to see growth, up 30.7%, but the volume was too low to offset the wider downturn.
“Half a year of declining demand for new vans reflects a difficult economic climate and weak business confidence,” said Mike Hawes, SMMT Chief Executive. “This downturn comes just as industry invests heavily to expand its zero-emission LCV offering, which is particularly concerning.”
Pick-up market hit by tax changes
Despite an overall 10% increase in pick-up registrations in the first half of the year, the segment saw declines in both May and June following a change to the tax treatment of double-cab models introduced in April. The new fiscal rules treat these vehicles as cars for benefit-in-kind and capital allowance purposes, reducing their appeal to businesses and putting pressure on demand for lower-emission models.
SMMT warned that the change could hinder the adoption of newer, cleaner vehicles and reduce overall tax revenues due to falling registrations. The organisation is calling on the government to postpone the reform by at least a year to allow businesses more time to adapt.
Electric vans grow rapidly but miss mandated target
Battery electric vans saw a 52.8% increase in registrations in the first half of 2025, with 13,512 units registered. June alone saw a 97% year-on-year rise in electric van sales. Despite this rapid growth, electric LCVs made up just 8.6% of the overall market—well short of the 16% share mandated by the government under the Zero Emission Vehicle (ZEV) mandate for 2025.
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There are now almost 40 different electric van models available in the UK, up from 28 a year ago, but the lack of infrastructure remains a critical barrier to uptake. Many businesses continue to face challenges accessing suitable public and depot charging, as well as lengthy grid connection times for commercial sites.
“Decarbonisation remains a shared ambition, but with the EV market more than a third below this year’s target, bold measures are needed to drive demand,” said Hawes. “Accelerated CV infrastructure rollout, quicker grid connections and streamlined planning are now critical.”
Commercial EV uptake remains slow across wider freight sector
Separate research from Inverto, part of Boston Consulting Group, highlights similar issues across the broader freight sector. The number of electric commercial vehicles, including vans and lorries, rose by 31% over the past year to 88,787, but they still account for just 1.4% of the UK’s 6.2 million freight vehicles. In the HGV segment, electric vehicles represent only 0.02%, reflecting the lack of viable zero-emission options for heavier duty use cases.
“High financing costs and lack of viable electric HGV options are slowing adoption,” said Kiren Pandya, Principal at Inverto. “The cost of purchasing or leasing EV freight fleets remains a major challenge, particularly in the current high-interest environment.”
While many logistics firms are under pressure to meet Scope 3 emissions targets through commercial contracts, the limited supply of electric HGVs and the cost of transition are expected to keep uptake slow for the foreseeable future.
Manufacturers race against policy and market headwinds
As the UK heads into the second half of 2025, both industry and policymakers face mounting pressure to accelerate the transition to zero-emission commercial vehicles. While manufacturers continue to expand their electric offerings, the market is still falling short of mandated goals, hampered by infrastructure constraints, fiscal uncertainty, and macroeconomic headwinds.
Further details on the future of the Plug-in Van Grant and government support for commercial vehicle electrification are expected later this year as part of the UK’s comprehensive spending review.
