Chinese Automakers Overtake Japanese in Europe for the First Time — And Tariffs Couldn't Stop Them

In May 2026, Chinese automakers achieved a historic milestone in Europe: for the first time, their combined sales surpassed those of Japanese brands in the region. According to ACEA data, five major Chinese automakers — SAIC, BYD, Geely Group, Chery, and Great Wall Motor — overtook Japanese manufacturers, overcoming high EU tariff barriers that were designed to slow their advance .

Which brands led the surge?

Three Chinese groups drove the breakthrough:

• BYD: Sales jumped 136.6%–159% year-on-year in May, reaching roughly 99,000 units in Europe . BYD's growth has been extraordinary: in 2025 it tripled its European registrations to 187,657 units, a 268.6% increase from 2024 .
• Geely Group: Sold about 33,877 units in May and surpassed Ford in European sales .
• SAIC (MG): Remained a top Chinese seller alongside BYD and Geely, part of the group of five automakers that collectively sold 138,410 units in 31 major European countries in May .

Nearly a quarter of all new hybrid vehicle sales in Europe in May came from Chinese brands .

What market share did Chinese brands capture?

Chinese brands captured between 10.5% and 12% of the broader European new-car market in May 2026, depending on geographic scope:

• EU only: 10.5% market share .
• Broader Europe (EU + UK + EFTA): 11.4% of new-car registrations, according to Dataforce data cited by Reuters, with total European registrations reaching 1,152,523 units in May .

This was a sharp increase from about 6% for the full year 2025 and from 9.8% as recently as April 2026 . The Japanese brands that Chinese makers overtook sold 134,240 units (11.3% share) in the same period .

Did EU tariffs on Chinese EVs stop the trend?

The tariffs have largely failed — and in some respects backfired.

• The EU imposed additional tariffs of up to 35.3% on Chinese EVs starting in 2024 . A Kiel Institute study had projected a 25% decline in Chinese EV imports as a result .
• Reality: Chinese hybrid imports into the EU surged fivefold in the first three quarters of 2025 compared to the prior year . In the first quarter of 2026, Chinese vehicle exports to Europe hit 438,400 units — an 84.7% surge .
• In January 2026, the EU pivoted from tariffs to a minimum price floor system for Chinese EVs. Analysts say this provided more stable margins for both Chinese exporters and EU manufacturers while still allowing Chinese brands to compete on value .
• Tariffs did dent pure-EV registrations initially in mid-2024, but Chinese manufacturers compensated by shifting toward hybrids (not subject to the same tariff regime) and by leveraging significant cost advantages . By April 2026, plug-in hybrids accounted for nearly 29% of Chinese vehicle sales in Europe, compared to 15.2% for pure electrics .

The result: Chinese brands' pure-EV share in Europe still breached 15% for the first time in April 2026 .

What's happening in China's domestic market?

China's passenger car market has been in a severe downturn, which is directly fueling the export push:

• May 2026: Sales dropped 22.3% year-on-year to 1.53 million vehicles — the eighth consecutive month of decline .
• First five months of 2026: Sales down 19.7% to 7.18 million vehicles, per the China Passenger Car Association . Another source reports a 19.5% decline over the same period .
• Internal combustion engine vehicle production fell 45% year-on-year in May .

The CPCA now expects full-year 2026 domestic sales to drop 11%, a sharp revision from its earlier forecast of a 1% decline .

How is overcapacity driving a record export push?

The domestic slump has forced Chinese automakers to seek markets abroad aggressively:

• Exports Jan–May 2026: Auto exports hit 4.059 million units, up 63% year-on-year .
• May 2026 alone: 930,000 vehicles exported, marking the second consecutive month above 900,000 units .
• New energy vehicle (NEV) exports: Reached approximately 435,000 passenger cars in May — over half of total exports . In March, NEV exports jumped 140% year-on-year to a record 349,000 units .
• Full-year projection: CAAM deputy secretary-general He Yi projects China's annual auto exports will hit 10 million units in 2026, which would be an all-time record for any country .

Multiple sources confirm severe overcapacity in China, with domestic automakers operating well below utilization rates and engaging in brutal price wars that have squeezed dealer margins . While the specific "81% of dealerships selling at a loss" figure could not be independently verified, widespread dealer distress is well-documented in coverage of China's price war and margin compression.

Chinese brands surpassed Japanese in global sales (2025)

In a related historic shift, Chinese automakers' combined global vehicle sales overtook Japanese manufacturers for the first time in 2025. Reuters and other sources confirm that this milestone was driven by domestic scale and soaring exports , marking a fundamental change in the global auto industry hierarchy.

The bottom line

Nearly all major claims in this analysis are substantiated by high-authority sources including Reuters, ACEA, CPCA, Bloomberg, PBS, and The Economist. Chinese automakers are not merely entering Europe — they are reshaping the competitive landscape, and EU trade barriers have so far failed to slow their momentum. The combination of severe overcapacity at home and aggressive export strategy abroad suggests this trend will continue to accelerate.