Signs of Recovery After Extended Downturn
Europe’s car industry is gradually returning to steadier ground following several years of turbulence. Data from the European Automobile Manufacturers’ Association (ACEA) indicate that vehicle registrations across the European Union have held steady through 2025, ending a prolonged period of contraction. The improvement reflects smoother supply chains, easing energy costs, and a rebound in consumer demand. Electric models have been central to this recovery, now representing around 20% of new car sales, supported by national incentives and the rollout of charging networks across major EU economies.
Chinese Entrants Strengthen Their Position
While Europe’s market steadies, Chinese automakers are rapidly expanding their presence on the continent. Leading brands such as BYD, MG, and Zeekr have increased exports and unveiled plans for European production facilities designed to offset new import tariffs. In late 2024, the European Commission introduced duties of up to 35% on Chinese-made electric vehicles, citing state subsidies that give these companies a cost advantage. Despite the trade measures, Chinese manufacturers continue to gain traction, holding an estimated 5% share of Europe’s car market and appealing to consumers with competitive pricing and advanced technology.
Established Brands Grapple With New Market Realities
Europe’s traditional automakers—including Volkswagen, Renault, and Stellantis—are facing sustained pressure on profitability even as overall sales stabilize. The influx of lower-cost Chinese EVs has intensified price competition, pushing European producers to rethink their strategies and accelerate investment in local battery production. Industry leaders have urged policymakers to strengthen industrial support for the clean mobility transition to safeguard jobs and technological leadership. Analysts suggest that 2026 could prove decisive, determining whether Europe’s established carmakers can adapt quickly enough to withstand mounting global competition in the electric age.
