Recovery Takes Hold Across Key Markets
After several challenging years, Europe’s automotive sector is showing signs of renewed strength. The latest figures from the European Automobile Manufacturers’ Association (ACEA) reveal that car registrations across the European Union have stabilized in 2025, marking a turning point after persistent declines. Manufacturers are benefiting from improved component supplies and more predictable energy prices, helping output recover to pre-crisis levels. Electric vehicles continue to gain traction, making up about one in five new cars sold across the bloc, driven by national incentive schemes and greater consumer confidence in charging infrastructure.
China’s EV Makers Gain Ground in Europe
Even as European automakers regain momentum, competition from Chinese electric vehicle producers is intensifying. Industry leaders such as BYD, Geely, and SAIC’s MG brand have expanded shipments to Europe and are moving forward with plans for local assembly plants to avoid new EU import tariffs. The European Commission imposed duties of up to 35% on Chinese-built electric cars at the end of 2024, citing state-backed subsidies that distort market competition. Despite the added costs, Chinese manufacturers are steadily increasing their foothold, holding roughly 5% of Europe’s passenger car market and growing particularly fast in the budget and fleet sectors.
Legacy Automakers Face Strategic and Financial Pressure
For Europe’s established carmakers—including Renault, Volkswagen, and Stellantis—the return to market stability has not eased profit concerns. Tight margins and aggressive pricing from Chinese rivals are forcing European firms to accelerate cost-cutting programs and localize battery supply chains. Industry associations have urged the EU to expand funding for clean-technology manufacturing and ensure fair conditions for homegrown producers. Analysts caution that the next year will be pivotal, as Europe seeks to balance industrial competitiveness with its commitment to lead the global transition toward electric mobility.
