Automotive News Europe — 2026-08-03
Automotive Industry
The entry of Chinese automakers in the past five years has reshaped the European auto market, with companies such as BYD, SAIC and Chery moving steadily up the sales tables and threatening century-old players such as Ford and even Mercedes-Benz.
Facing overcapacity, a vicious price war and a slumping economy at home, Chinese brands have turned to export markets, especially Europe, in their search for profits. From a 0.5 percent market share in 2021, Chinese brands now have 9.5 percent of the market in the EU, U.K. and EFTA countries, according to figures from Dataforce through June.
In that time, the market has grown by 11 percent, and non-Chinese brands have lost share, even if their sales rose slightly.
Chinese brands’ selling proposition has been to offer similar or better features and more space than European rivals at lower prices, even as battery-electric vehicles built in China face tariffs of up to 35 percent from the EU. In recent months, some Chinese manufacturers have been offering five-figure discounts in key markets such as Germany, and they have also entered the short-term rental market.
As Chinese brands have ascended, some European rivals have lost more share than others (see chart, below), starting with Stellantis, which has lost 6.4 percentage points, or about 310,000 sales. Stellantis has been struggling with bloated inventories, an aging EV lineup and pricing at or above market benchmarks, which has left it vulnerable to losing sales to technologically advanced, lower-cost Chinese brands — including its own partner, Leapmotor, which increased sales by 568 percent through June.
Mercedes-Benz Group has lost 0.7 percentage points, Volkswagen Group has lost 0.6 points and Hyundai/Kia lost 0.4 points — even as the South Korean brands increased sales slightly.
The competitive implications extend beyond sales volumes, experts said. European automakers that try to compete on price will face lower margins.
“The Chinese OEMs are running at an 11 percent market share in Europe. That was a 4 percent share last year,” Patrick Hummel of UBS said in a media briefing on July 9, referring to the June sales figures. “This has an impact not just on the volumes that European legacy OEMs are grabbing, but also on the pricing and incentive structures in the market.”
Chinese automakers have made most of their gains in the U.K. and in Southern European counties such as Spain and Italy (see chart, below), but the German market is squarely in their sights, Hummel said. “That doesn’t bode well for VW’s market share and for their pricing,” he said.
Analysts expect the pressure to intensify as Chinese brands continue their European expansion, especially as the China’s economy remains weak — the country’s auto market is down about 20 percent this year — and profits there are elusive.
Chinese market share could reach 30 percent
Analysts and industry experts are expecting Chinese brands to take a market share of at least 20 percent and as much as 30 percent in the coming years.
“We previously assumed Chinese brands could reach around 20 percent market share,” Martin Benecke, a manager at S&P Global Mobility, told Automotive News Europe sister publication Automobilwoche. “Now we are inclined to set that figure considerably higher. Why should they stop at one-fifth of the market?”
Paul Willis, Volkswagen’s former U.K. chief, told Automobilwoche that Chinese brands could ultimately account for as much as 30 percent of European vehicle sales.
If the EU does not act decisively with regulations such as the Industrial Accelerator Act, which if enacted could require extremely high levels of Europe-based content, European mass-market automakers may have no other choice than to close factories and potentially shutter brands.
The window to act is closing quickly, Hummel said. “The cutthroat price competition that is being exported from China into Europe is not happening over years. This is happening now, and it will unfold month after month, quarter after quarter,” he said.
A strategy that involves sharing factory space with Chinese partners — as Stellantis is doing in France and Spain — is not sustainable for Europe-centric brands such as Renault and VW, he said.
“Capacity reduction by the [legacy automakers] is probably the name of the game,” Hummel said.
European automakers are streamlining operations and revamping their engineering and development practices to move at “China speed” to bring new cars to market in about two years instead of five to seven years in the past.
“You’re in a super-intense competitive environment that requires being as lean and as fast as possible,” Hummel said. “Then we will see where the margins shake out.”
Which automakers are best placed to survive a scenario where Chinese brands, with their lower cost base, hold up to a third of the European market?
Premium brands such as BMW, Mercedes-Benz and Audi are more insulated from Chinese competition for now because there is less overlap with cars sold by brands from China and they have a huge advantage in residual values, Hummel said.
For example, although BMW Group is struggling financially this year, issuing a surprise profit warning in June on weakness in the Chinese market, its sales in Europe are holding up well. It was the only major legacy automaker to beat the market in June, with sales up 13.3 percent in a market that was up 13 percent for the month.
Chinese brands that are trying to play in the premium space include Geely’s Zeekr, BYD’s Denza, Dongfeng’s Voyah and Chery’s Exeed.
“The Chinese will probably continue creeping up slowly into higher end segments,” Hummel said, “but this is a process that will take several years.”