Chinese Makers Top Japanese in May Europe Auto Sales Amid Subsidies Return
Despite EU Tariffs, Chinese EVs Hold Price Edge and Expand in Europe
Chinese automakers have overtaken Japanese brands in a key European sales milestone for the first time, underscoring a rapid shift in consumer demand toward Chinese electric vehicles and a growing ability to compete on price even as trade barriers rise.
In May, Chinese companies sold 138,410 vehicles across 31 major European markets, surpassing six Japanese brands, which posted 130,424 units. The gap—about 6%—marks the first time monthly sales in Europe have tilted in China’s favor.
The performance was driven by five Chinese automakers led by BYD, with additional contribution from SAIC Motor, Geely, Chery and Leapmotor. Collectively, the Chinese group’s May sales rose sharply—up 65% compared with the same month a year earlier—while Japanese brands recorded a small decline of 3%. One month earlier, the balance had been the other way around, showing how quickly market positioning can change.
The European comparison also reflects a methodological update by the industry body that compiles the figures. Beginning in April, the statistical approach was revised to include three additional Chinese companies in the tally, while Volvo’s results were consolidated under its parent company Geely. That adjustment helped narrow differences in the historical count, but the speed of the reversal from April to May still reflects genuine commercial momentum on the ground.
BYD’s overseas push is at the center of the trend. The company reported that its overseas passenger vehicle sales—including pickup trucks—reached 789,367 units in the first half of the year, up 70% year over year. June alone delivered 175,349 vehicles, nearly doubling (+94.7%) from a year earlier. Critically, overseas sales now account for 44% of BYD’s total, a jump of 20 percentage points compared with one year ago.
BYD’s leadership has been projecting continued acceleration. At a shareholders’ meeting earlier this year, chairman Wang Chuanfu said BYD expects overseas volume to exceed 1.6 million vehicles this year—more than one and a half times the 1.04 million unit total recorded last year—an outlook that aligns with the company’s steep growth curve in Europe.
Behind the drive to expand abroad is mounting pressure in China’s domestic market. BYD’s China sales totaled 1,808,511 vehicles in the first half, down 16% year over year, with June domestic sales falling 22%. The wider market outlook has also deteriorated: forecasts for China’s auto sector were reportedly revised from a near-flat decline expectation to a much deeper contraction, reflecting weak demand and intensified price competition.
Europe has provided a counterweight to that slowdown, largely because incentives for electric vehicles have returned. Germany, which ended EV subsidies in late 2023, restarted support in January, offering as much as 6,000 euros for new purchases of electric vehicles and plug-in hybrid vehicles. Other countries including Sweden and Italy expanded targeted programs as well. The timing matters: these incentives improve the effective purchase price for EV shoppers, helping Chinese brands convert interest into sales.
Japanese automakers face a disadvantage in this particular policy environment. While Japan’s strengths are often associated with hybrid technology, European EV incentive schemes favor electric lineups. Researchers have argued that many European consumers do not view Japanese models as likely choices when shopping specifically for EVs, in part because Japanese companies’ electric offerings remain relatively limited compared with their hybrid focus.
Trade policy has also been a stress test. The EU has imposed steep tariffs on Chinese vehicles. Since autumn 2024, additional tariffs of up to 35.3% have been added on top of a baseline 10% duty, bringing the combined level to 45.3%. Despite those charges, Chinese cars are still holding pricing power, helped by scale efficiencies and aggressive cost structures. One example cited in Germany is BYD’s compact Dolphin Surf Boost, priced at 26,990 euros—about 3% cheaper than a similarly configured Renault EV listed at 27,770 euros.
Chinese brands are also boosting plug-in hybrid exports, a category that is not subject to the additional tariff level. In May, plug-in hybrid vehicle sales across 31 major European markets rose to 2.4 times the previous year’s level, providing another route to expand even amid tariff pressure.
At the same time, companies are adjusting their strategies to reduce future exposure to tariffs through local production. Leapmotor is preparing to assemble SUVs at a Stellantis plant in Spain. Chery has opened its European operations headquarters in Barcelona, also in Spain, and Nissan’s underutilized Sunderland facility in the UK is reportedly consolidating production lines, with discussions about manufacturing Chery vehicles on the freed-up capacity. These moves signal a shift from pure export models toward more location-based supply chains.
BYD, for its part, is considering deeper manufacturing investment in Europe. An advisor to BYD’s European subsidiary said on July 2 that selecting a site for a second European plant—after the company’s Hungary facility—is expected imminently. At the same time, BYD’s stated ambition is to become the world’s top automaker within five years, citing momentum in exports and progress in battery and fast-charging technologies.
For Japanese automakers, Europe appears to be losing strategic weight. Nissan’s longer-term vision reportedly mentioned Japan, the United States and China as primary markets while barely addressing Europe. With Chinese brands now establishing a stronger presence, the shift is no longer just about temporary discounts or model launches—it is about changing consumer perceptions, expanding product availability, and restructuring operations to match Europe’s regulatory and economic landscape.
As Chinese automakers’ overseas share rises—BYD’s alone surpassing 40%—their growth strategy is no longer only about shipping cars. It now requires parallel investment in logistics, inventory management, local dealer networks, after-sales service, and charging infrastructure. The upside is large, but so are the operational challenges of scaling a Europe-wide business quickly.
