The European car market rebounded strongly! Sales in June recorded the biggest increase in nearly three years, and electric vehicles became a “lifesaver”

The Zhitong Finance App learned that with the sharp increase in sales of pure electric vehicles, European car sales achieved a strong rebound in June, bringing a glimmer of respite for European car manufacturers facing rising costs and competitive pressure from Chinese car companies.

According to data released by the European Automobile Manufacturers Association (ACEA) on Thursday, the number of new car registrations in Europe increased 13% year over year to 1.41 million vehicles. This is the biggest year-over-year increase since October 2023. Sales of battery-powered vehicles increased 51% year over year, bringing the market share of plug-in vehicles (including pure electric vehicles and plug-in hybrid vehicles) to more than one-third.

New car sales in Europe increased 13% in June

France and Germany are Europe's largest electric vehicle markets. Driven by new incentives, these two countries contributed most of the increase in sales. With the exception of Poland, sales of electric vehicles increased in all other European countries. Furthermore, continuing high fuel prices are also weakening consumers' willingness to buy fuel vehicles.

Automakers including Volkswagen Group and Stellantis NV (STLA.US) are encouraged by this data performance. These companies are restructuring their businesses to better cope with competition from Chinese automakers — Chinese car companies, including BYD and Geely, are expanding their European market layout.

Although the registration volume of traditional European car manufacturers has increased, the market share of Chinese brands has also increased, mainly due to the promotion of the British market. According to data from the British Automobile Manufacturers and Traders Association (SMMT), in the UK, BYD and MG, which is owned by SAIC Motor Group of China, both increased by more than one-third in June. In March of this year, Chery's Jetu 7 model became the highest-selling car in the UK. In the European market as a whole, SAIC Motor's MG brand and BYD together occupied 5.4% of the market share in June last year, up from 3.4% a year ago.

These new contenders are offering European consumers more attractive trading conditions. An industry research report at the end of June said that competition from Chinese brands is forcing European car manufacturers to lower prices and provide more preferential measures.

Competitive pressure is expected to remain high as Chinese manufacturers push further to localize production. For example, BYD is building a factory in Hungary. Earlier this year, Fiat parent company Stellantis agreed to allow Zhejiang Lingrun Technology and Dongfeng Motor Group to enter production at its European plant.

Performance of major automakers in June

The increase in car registrations in Europe will bring relief to European car manufacturers. These companies are currently facing the double pressure of high domestic production costs and sluggish sales in China, the world's largest automobile market.

Europe's largest car manufacturer, Volkswagen, is in one of the worst crises to date. The company is considering further cutting 50,000 jobs, bringing the total potential layoffs to 100,000 people, and possibly closing up to 4 German factories. In addition, Volkswagen is also planning to cut its model lineup of brands, including Porsche, Audi, and Skoda. Currently, it has about 150 models, which may be reduced by half in the future. Cost reduction actions are also being carried out among other car companies. The BMW Group, the Mercedes-Benz Group, and the French car manufacturer Renault Group are all seeking to further improve operational efficiency.