Europe’s new car market faced continued pressure in the first half of 2025, with declining registrations and shifting competitive dynamics. While overall volumes softened, Chinese car brands emerged as the standout winners, gaining record market share and overtaking established global players in key metrics.
Europe’s New Car Market in Decline
European new car registrations fell by 4.4% year-on-year in June 2025, reaching approximately 1.25 million units. The downturn was especially pronounced in Italy, Belgium, and Germany, while France and Switzerland also recorded notable declines. For the first half of the year, total registrations dropped 0.3% compared to H1 2024, reflecting ongoing instability in the market.
High vehicle prices, geopolitical and economic tensions, and long-term post-pandemic structural changes continue to suppress demand. Compared to pre-pandemic levels in 2019, Europe has lost more than 1.5 million units in the first half of 2025 alone.
Chinese Brands Accelerate Growth
Despite the shrinking market, Chinese car brands nearly doubled their market share year-on-year to 5.1% in H1 2025, with volumes up 91%. In June, Chinese manufacturers collectively outsold Mercedes-Benz, and they now sit just behind Mercedes in year-to-date market share.
Five brands are driving this momentum: BYD, Jaecoo, Omoda, Leapmotor, and Xpeng.
BYD led the surge, registering over 70,000 units in H1, up 311% year-on-year, supported by aggressive pricing and strong plug-in hybrid performance.
Jaecoo and Omoda gained traction primarily through plug-in hybrid and ICE SUVs rather than full battery-electric vehicles.
Leapmotor saw strong demand for its compact T03 and C10 models.
Xpeng positioned itself as a premium Chinese brand, driven largely by demand for the G6 SUV.
Established Automakers Lose Ground
While Chinese brands expanded, several legacy automakers lost market share. Stellantis experienced the largest decline, with its share falling from 16.7% to 15.3% in H1 2025. Limited new model launches and a stronger focus on higher-priced BEVs weighed on performance.
Tesla also saw a sharp contraction, with market share dropping from 2.4% to 1.6%. It was overtaken by SAIC Motor (MG) in total registrations for the first time, highlighting intensifying competition from both Chinese and European rivals.
BEVs Reach a New Milestone
Battery electric vehicles remained a bright spot. BEV registrations surpassed one million units for the first time in H1 2025, reaching nearly 1.2 million units, up 25% year-on-year. BEVs accounted for 17.4% of Europe’s total new car market, with the highest adoption seen in Northern and Western Europe.
However, growth moderated in June, suggesting that while electrification continues, momentum is uneven across regions and manufacturers.
Model and Brand Highlights
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The Tesla Model Y remained Europe’s top-selling BEV in both June and H1 2025, stabilizing after steep declines earlier in the year.
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Renault Group topped overall model rankings, with the Clio and Dacia Sandero leading registrations.
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Strong growth was recorded for models such as the Volkswagen Tiguan, Peugeot 3008, MG ZS, and several newer EV and PHEV launches from both European and Chinese brands.
Key Takeaways
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Europe’s auto market continues to contract, but competition is intensifying rather than easing.
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Chinese car brands are rapidly gaining share through competitive pricing, diversified powertrains, and faster product cycles.
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Legacy manufacturers face mounting pressure to balance electrification, affordability, and product renewal.
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BEVs are becoming central to market strategy, though growth patterns vary widely by country and brand.
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