European market share milestone reflects rapid expansion driven by hybrid vehicles and competitive pricing
Chinese automobile brands have achieved a historic milestone, overtaking Japanese manufacturers in Europe’s new-car market on a quarterly basis for the first time. In September, Chinese brands commanded 12.7% of the European market, edging past Japanese automakers Toyota and Nissan at 11.9%, according to market research firm Dataforce.
The shift marks a dramatic acceleration. Just five years ago, Chinese brands held barely 1% of European sales. Their surge has been fueled primarily by hybrid vehicles, which have allowed Chinese companies to gain ground even as the European Union imposed additional tariffs on battery electric vehicles. By offering price-competitive hybrid models, Chinese manufacturers have found a lucrative niche in a market increasingly concerned about fuel costs and environmental regulations.
The momentum is particularly strong in the United Kingdom, where Chery Automobile’s Jaecoo 7 sport-utility vehicle ranked as the best-selling model in March and September. The achievement is striking considering that Japanese competitors like Toyota have been established in Europe since 1963, while Nissan has manufactured vehicles at its Sunderland plant in the UK for nearly four decades.
Chinese automakers are aggressively pursuing European expansion. At the Paris Motor Show this month, BYD, Chery, and Zeekr—an affiliate of Geely Auto—unveiled multiple new models designed for European consumers, including BYD’s Dolphin G DM-i, a compact plug-in hybrid tailored to European preferences. Rising fuel prices and growing consumer interest in electric and hybrid vehicles are accelerating demand.
The competitive pressure is intensifying for European automakers, which face a squeeze from multiple directions. Major brands including Volkswagen, BMW, and Mercedes-Benz are losing market share in China, their largest market, to local competitors offering lower prices and rapid model launches. Simultaneously, as Chinese demand slows, homegrown companies are ramping up European sales, creating a dual challenge for established European manufacturers.
Regulators are responding with protective measures. Beyond existing tariffs on Chinese electric vehicles, the EU agreed in principle this month to restrict imports of Chinese-made hybrids. Policymakers are also considering subsidies and tax benefits favoring vehicles produced within the bloc—a particularly powerful incentive in markets like Germany, where corporate fleet purchases represent a substantial share of sales.
The regulatory push carries complications. Countries including the UK, Turkey, and Morocco that supply vehicles and parts to the EU could face headwinds from “made in Europe” requirements, while European manufacturers worry about disrupted global supply chains and rising costs.
Chinese companies are already adapting. Chery is preparing production in Barcelona, Spain; BYD is completing a plant in Hungary; and Leapmotor, through a joint venture with Stellantis, has begun manufacturing its B10 SUV in Zaragoza, Spain.
The future trajectory of Chinese market share will likely hinge on the stringency of EU regulations and the pace of local manufacturing expansion. As tariffs and import restrictions tighten, production capabilities within Europe will increasingly determine sales success. For European automakers, the outlook appears challenging as weakness in their largest market coincides with eroding domestic share.
