Market Finds Balance After Years of Decline
Europe’s automotive sector is emerging from a period of volatility, with fresh data pointing to a more stable outlook. The European Automobile Manufacturers’ Association (ACEA) reports that car registrations across the European Union have held steady through 2025, marking a shift from the sustained downturn that followed the energy and supply crises of earlier years. Improved logistics, consistent consumer demand, and a steady energy market have supported this rebound. Electric vehicles are playing a central role in the recovery, now accounting for around one in five new cars sold, backed by national incentives and expanding charging infrastructure.
Chinese Brands Push for a Larger Share of the Market
As European production steadies, Chinese automakers are moving aggressively to capture more of the continent’s electric vehicle market. Major manufacturers such as BYD, SAIC’s MG, and Geely’s Zeekr have increased exports and announced new European assembly projects designed to counteract import duties. The European Commission imposed tariffs of up to 35% on China-produced EVs at the end of 2024, citing unfair state subsidies that distort competition. Nevertheless, Chinese models continue to gain ground, securing roughly 5% of Europe’s passenger vehicle market and appealing to budget-conscious consumers and fleet buyers seeking lower-cost electric options.
Legacy Carmakers Face Mounting Strategic Challenges
Established European automakers—including Volkswagen, Renault, and Stellantis—are feeling the squeeze as new competition reshapes the market. While sales have stabilized, profitability remains under strain due to fierce price competition and rising production costs. Industry groups are urging the European Union to strengthen policies that support local battery manufacturing and innovation in green technology to maintain the region’s competitiveness. Analysts suggest that 2026 could be a defining year for Europe’s carmakers, as they navigate the accelerating global transition toward electric mobility and contend with growing pressure from fast-expanding Chinese rivals.
