Automotive market update - January: New car sales up 3.4% in best start to the year since pre-pandemic 2020

Welcome to our monthly market insight article where we provide a snapshot of what’s happening in the UK automotive market. Each month, we highlight key industry updates and trends, including electric vehicle (EV) adoption, plus our vehicle leasing insights.

Here Managing Director Kelly Marshall gives her take on January’s performance.

What’s happening with new car sales in the UK?

It’s been a positive start to 2026 for the new car market, with sales up 3.4% in January to reach 144,127 registrations, according to the latest data from The Society of Motor Manufacturers and Traders (SMMT).

The SMMT says that this is the best start to the year for new car sales since pre-pandemic 2020, and as one of the leading car leasing brokers in the UK we’re certainly seeing that.

January 2026 was a record-breaking month for us, with sales up 36% year on year, across all of our channels - personal contract hire (PCH), business contract hire (BCH) and salary sacrifice through our partner, The Electric Car Scheme.

PHEV sales up 47.3%

Plug-in hybrid electric vehicle (PHEV) sales had the greatest gain in January and were up an impressive 47.3%, followed by hybrids (4.8%) and full electric vehicles up 0.1%.

EV sales were undoubtedly affected by the push from car manufacturers at the end of 2025 towards Government zero emission vehicle sales targets and we don’t believe January’s registrations for EVs are any indication of what’s to come in 2026.

The SMMT has revised its forecast for EV sales upwards to a market share of 28.5% by the end of this year thanks to increasing model choice, improved range and the Electric Car Grant.

EVs made up 54% of our total orders including all vehicles (new and used, cars and vans) across all channels in January, while PHEVs accounted for 48% of new car orders across all channels.

What drove sales in January?

Fleets accounted for the majority of new car sales (61.2% of the market) in January but we’re pleased to note that growth was recorded across all new car buyer types.

Our own sales in January followed the overall market trend, with business contract hire and salary sacrifice through The Electric Car Scheme accounting for 55%. Based on volume, this is an uplift of 17% compared with the 2025 average.

Once again, the Chinese car brands are making a significant contribution to sales. The Jaecoo 7, BYD Seal U, and MG HS all featured in the SMMT’s top 10 best-selling cars while our own most popular models included the Omoda O5, BYD Sealion 7, and both the MG HS and ZS.

Gateway2Lease’s top 10 most popular cars in January

1. Kia Sportage
2. MG HS
3. MG ZS
4. Tesla Model Y
5. Omoda O5
6. BYD Sealion 7
7. Volvo XC40
8. Nissan Qashqai
9. Lexus LBX
10. Tesla Model 3

The UK’s top 10 best-selling cars in January

1. Kia Sportage
2. Jaecoo 7
3. Ford Puma
4. Nissan Qashqai
5. Vauxhall Corsa
6. BYD Seal U
7. Nissan Juke
8. Volkswagen Tiguan
9. Volkswagen Golf
10. MG HS