Industry Recovery Gains Momentum
After a prolonged period of turbulence, Europe’s car market is showing clearer signs of recovery. Figures from the European Automobile Manufacturers’ Association (ACEA) reveal that new vehicle registrations across the European Union have remained steady throughout 2025, marking a break from several years of contraction. The rebound is being fueled by improved parts availability, steady economic conditions, and consistent consumer demand. Electric vehicles continue to drive much of this growth, making up roughly one-fifth of total new car sales, supported by national incentives and expanding charging networks across the region.
Chinese Automakers Strengthen Their Foothold
At the same time, Chinese electric vehicle makers are gaining momentum in Europe. Companies such as BYD, MG, and Zeekr are expanding their presence through increased exports and plans to open production facilities within the EU. These moves come in response to new tariffs—reaching up to 35%—introduced by the European Commission in late 2024 after an investigation into state-supported subsidies. Despite these restrictions, Chinese brands have grown their collective share to about 5% of the European car market. Their competitive pricing, improving quality, and technological innovation are winning over buyers seeking affordable, well-equipped EVs.
European Manufacturers Face Mounting Pressure
For Europe’s established carmakers, including Renault, Stellantis, and Volkswagen, stability in sales has not translated into stronger profitability. Heightened competition from Chinese entrants is squeezing margins and prompting a renewed push for efficiency, cost control, and greater investment in local battery manufacturing. Industry leaders are urging Brussels to expand support for the continent’s auto sector to ensure it remains competitive in the global electric transition. Market analysts suggest that 2026 will be a pivotal year—one that will test how effectively Europe’s long-standing automotive giants can adapt to a rapidly evolving, electrified landscape.
