By Elisabeth Behrmann
Chinese cars made up more than one in ten new purchases in Europe for the first time last month, as consumers flock to models that offer better features for less money.
Hybrid and plug-in hybrids like the MG S9 sport utility vehicle helped Chinese automakers take 11% of European sales in May, according to analysts at Dataforce. They captured nearly a quarter of all new hybrid car sales, while demand for fully-electric cars from China also rose.
Comparing two seven-seater SUVs, buyers of the China-made MG S9 make savings and get more horsepower compared to the VW Tayron, according to Litzinger, with the car’s quality holding up.
Manufacturers like BYD Co. and SAIC Motor Corp., whose formerly British MG brand is leading sales in the region, are pushing aggressively into Europe as an outlet for a car glut at home. Despite steep discounts and quick succession of new models, sales in China are plummeting as consumer spending sags under the weight of a housing crisis and a fragile jobs market.
The European Union has sought to protect local carmakers like Volkswagen AG, Stellantis NV and Renault SA, though Brussels’ additional tariffs that started in 2024 only apply to fully-electric vehicles made in China. With a lower trade barrier for hybrids, delivery gains of these types of cars are outpacing battery-only vehicles.
Chinese carmakers can access a range of domestic subsidies including grants, cheap land and financing that lower their cost base.
They’re also able to benefit from state support in Europe. In Germany, the government has started a new incentive program for zero-emission vehicles worth €3 billion ($3.4 billion). As well as EVs, the subsidies, which can rise to as much as €6,000 for lower-income households, also apply for plug-in hybrids and cars with range extenders.
Chinese brands, particularly MG and BYD, have recorded the biggest gains in sales in Germany since the subsidy was launched, weekly magazine WirtschaftsWoche reported Friday, citing a survey by the VAD car dealerships’ lobby. MG and BYD posted average gains of between 50% and 75%, it said.
Meanwhile, Europe’s manufacturers are working through setbacks in the transition to EVs. Most are pushing to water down EU targets on CO2 emissions, with consumers proving fickle on buying pricey battery cars that expose them to a patchy charging network.
“EU policy of regulating local carmakers heavily at all levels, whilst not (yet) taxing foreign manufacturers that don’t have the same regulatory cost base, is having the effect one would expect,” Citigroup analyst Harald Hendrikse said in a note. “The EU needs to protect the EU auto industry — as it has done with EU steel.”
The EU is preparing to extend additional tariffs on Chinese hybrid cars, German newspaper Handelsblatt reported this month.
A crowd of new hyper-competitive upstarts is adding to the challenges for Europe’s carmakers. High energy and labor costs, a sluggish home market, US tariffs and waning sales in China are sapping profits. BMW AG last week said it may make hardly any returns from carmaking this year as a result.
In the UK, which charges no special tariffs, brands like BYD, MG, Omoda and Jaecoo are proliferating. Chery Automobile Co.’s Jaecoo 7 SUV was Britain’s fourth best-selling model in May, helping to drive Chinese carmakers’ share to above 16%.
While Chinese companies are most successful in the UK, Italy and Spain, they’ve started gaining ground in France and Germany too. They’re also stepping up moves to gain a manufacturing footprint, as European rivals struggle with overcapacity.
