Chinese automakers have surpassed their Japanese counterparts in vehicle sales across Europe for the first time over a full quarter, highlighting the rapid progress of brands such as BYD Co. and Chery Automobile Co. Registrations of Chinese-branded cars in the three months ending in September approximately doubled from the previous year, reaching 12.7% of the European market, according to data from market researcher Dataforce. This figure edged past the combined share of Japanese manufacturers, including Toyota Motor Corp., which stood at 11.9%.
The momentum of Chinese automakers accelerated notably toward the end of the quarter. In September alone, their market share climbed to a record 14.5%, nearly 3 percentage points higher than in August. Despite this surge, European manufacturers such as Volkswagen AG and Renault SA continue to dominate the region, but the rapid rise of Chinese brands has surprised industry observers. Five years ago, Chinese vehicles accounted for less than 1% of sales in Europe.
Japanese automakers have longstanding roots in the European market. Toyota, for example, has sold vehicles there since 1963 and operates manufacturing plants across the continent. Nissan Motor Co. has produced cars at its Sunderland facility in the United Kingdom since 1986. By contrast, Chinese automakers have increased their footprint more recently, finding particular success in the U.K., where Chery’s Jaecoo 7 SUV was the best-selling model in both March and September.
The shift represents a challenge for European manufacturers already facing difficulties. In China, weakening domestic demand has prompted firms like BYD to seek new markets. Meanwhile, Chinese buyers are moving away from European brands such as Volkswagen and BMW in their home market in favor of local alternatives. To capitalize on this trend, Chinese carmakers introduced several new models at the Paris motor show this month, including BYD’s Dolphin G DM-i, a compact plug-in hybrid designed specifically for European consumers.
These developments come amid rising fuel prices across Europe, which has increased interest in electric and hybrid vehicles. However, the European Union is taking steps to limit the rapid expansion of Chinese car imports, partly driven by state-supported subsidies in China. The EU recently imposed additional tariffs on battery-electric vehicles from China and agreed in principle to restrict the growth of hybrid imports. Following these announcements, shipments of hybrid vehicles from China accelerated amid speculation over further regulatory measures.
The European Commission is also considering new rules aimed at favoring vehicles produced within the EU when granting subsidies and tax incentives. Proposed measures include linking certain company car tax benefits to local production, a significant consideration in markets like Germany where corporate fleets represent a large portion of new car registrations. While some European manufacturers such as Mercedes-Benz Group AG have expressed support for these policies, they have cautioned that such rules could disrupt global supply chains and increase costs. Countries including the U.K., Turkey, and Morocco, which export cars and parts to the European Union, could be negatively impacted by regulations emphasizing "Made in Europe" credentials.
In response, Chinese manufacturers are preparing to establish production facilities closer to their key European markets. Chery is developing production capacity in Barcelona, Spain, while BYD is finalizing a manufacturing site in Hungary. Additionally, Zhejiang Leapmotor Technology Co. has begun assembling its B10 SUV at Stellantis NV’s plant in Zaragoza, Spain, signaling a strategic push to localize manufacturing amid evolving trade and regulatory conditions.