Chinese carmakers overtake Japan in Europe for first time
The shift is a double whammy for Europe’s struggling manufacturers.
Chinese automakers outpaced their Japanese rivals in Europe for the first time over a full quarter, marking a rapid rise for brands like BYD and Chery Automobile. Registrations of Chinese-branded cars roughly doubled in September compared to a year earlier, accounting for 12.7% of total sales across the region. This surge, primarily driven by hybrids, has now put Chinese manufacturers ahead of Japanese rivals such as Toyota Motor, which held 11.9% of the market.
While European manufacturers like Volkswagen and Renault still dominate, China's rapid growth has been a surprise. Five years ago, Chinese brands accounted for just 1% of European sales.
Japan's automakers have spent decades building their position in Europe, with Toyota selling cars there since 1963 and Nissan producing vehicles at its Sunderland plant in the UK since 1986. However, China's offerings have found a strong market in Britain, where Chery's Jaecoo 7 SUV was the country's best-selling model in March and September.
The shift poses a challenge for Europe's struggling manufacturers, as Chinese drivers are abandoning Western brands like VW and BMW for domestic rivals that are producing new models more quickly and at lower costs.
To capitalize on this trend, Chinese automakers are developing and bringing new models to Europe. Earlier in October, Chery, BYD, and Geely's Zeekr showcased a range of new models at the Paris car show, including the BYD Dolphin G DM-i, a compact plug-in hybrid designed specifically for European markets. The European Union has attempted to slow this expansion by imposing extra tariffs on China-made battery-electric vehicles and discussing potential measures to curb fast-growing imports of hybrid cars from China. This has accelerated shipments of hybrids.
The EU is also considering new rules that would favor locally made cars when granting subsidies and other incentives, including linking some company-car tax benefits to European production. While carmakers like Mercedes-Benz Group welcome the political backing, they warn of potential distortions to global supply chains, driving costs up.
European countries such as Britain, Turkey, and Morocco, which ship vehicles and parts to the EU, could face difficulties due to these new rules. Chinese manufacturers have been preparing for local production, with Chery developing a facility in Barcelona, BYD nearing completion of a site in Hungary, and Zhejiang Leapmotor Technology beginning production of its B10 SUV at Stellantis NV's plant in Zaragoza, Spain.
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