Chinese car sales accelerate in Europe as Brussels weighs putting on the brakes

Chinese carmakers continued their rapid expansion in Europe last month according to industry data released on Tuesday, as Brussels reportedly weighs fresh tariffs aimed at slowing their advance.

Geely Group was the highest-placed Chinese carmaker, ranking eighth among all manufacturer groups in May, according to the latest sales data released by the European Automobile Manufacturers Association (ACEA), covering the European Union, the United Kingdom and the four European Free Trade Association members: Iceland, Norway, Switzerland and Liechtenstein.

Including sales from European brands that it owns such as Volvo, Geely trailed European carmakers Volkswagen, Stellantis, Renault, BMW and Mercedes-Benz, Japan’s Toyota and South Korea’s Hyundai.

BYD sold more than 32,000 cars in May, up 136.6 per cent year on year, overtaking SAIC Motor to become Europe’s bestselling Chinese car brand, with a 2.8 per cent market share compared to SAIC’s 2.6 per cent. Chery and Leapmotor more than trebled their registrations from a small base.

“SAIC, BYD, Geely, Chery and Leapmotor sales continue to grow sharply in Europe, albeit from a low base,” Citi analysts led by Harald Hendrikse said in a note issued on Tuesday.

Combined sales for the five largest Chinese-owned groups – SAIC, BYD, Geely, Chery and Leapmotor – rose 65 per cent year on year last month and were up 61 per cent in the first five months of the year, taking 10.6 per cent of the wider European market, the Citi analysts said.

In comparison, many major European brands, with the exception of BMW and Mercedes, saw sales numbers decline last month.

Volkswagen Group, including Audi and Porsche, sold roughly 300,000 passenger cars across Europe in May, down by 3 per cent year on year, but maintained its position as Europe’s No 1 seller. Stellantis and Renault Group saw their May sales decline by 2.3 and 1 per cent respectively.

Shares of the three groups tumbled on Tuesday, with Volkswagen ending the day down more than 2 per cent, Renault down more than 4 per cent and Stellantis down more than 6 per cent.

Hendrikse said the share prices of European carmakers would be under continued pressure amid persistent structural headwinds – competition from China, rising raw-material and energy costs, and the mounting regulatory cost of battery-electric cars – limiting investor interest.

The combination of tariffs and the EU’s proposed Industrial Accelerator Act will reshape the long-term logic of Chinese carmakers’ expansion into Europe

Cui Dongshu, China Passenger Car Association

The fresh numbers came out amid reports that Brussels intends to expand EU tariffs on made-in-China automobiles.

German business daily Handelsblatt reported on Friday that the European Commission was preparing to impose anti-subsidy duties on plug-in hybrid electric vehicles (PHEV) imported from China, bringing the segment into the tariff regime that has applied to battery cars since October 2024.

That could curb growth in Chinese plug-in hybrid exports to Europe, said Cui Dongshu, secretary general of the China Passenger Car Association, noting that registrations of Chinese PHEVs had surpassed those of Chinese battery-electric vehicles in major European markets including Germany and Spain.

“The combination of tariffs and the EU’s proposed Industrial Accelerator Act will reshape the long-term logic of Chinese carmakers’ expansion into Europe,” Cui said. Leading players would endure by building local capacity and forging technological ties with European firms, he added, with competition shifting from price towards all-round local-operating capability.

Electrified models remained in strong demand across Europe, ACEA said, with battery-electric cars accounting for 20 per cent of EU registrations in the first five months of the year and plug-in hybrids 9.7 per cent.