Europe auto industry faced mixed fortunes in 2025, ACEA report finds

The European Automobile Manufacturers’ Association has published its latest Economic and Market Report, highlighting a year of moderate global growth alongside rising challenges for Europe’s automotive sector.

According to the report, the European Union’s economy performed better than anticipated in 2025, with GDP growing by 1.5% over the first nine months of the year. Growth is expected to remain steady through 2026 and 2027, while inflation is forecast to stabilise around the European Central Bank’s 2% target.

However, ACEA warns that escalating geopolitical tensions in the Middle East could pose a significant downside risk to these projections.

Worldwide car registrations rose by 3.5% in 2025, reaching 77.6 million units. Growth was largely driven by China, where registrations increased by 5.5% thanks to scrappage incentives and strong support for new energy vehicles.

North America recorded modest growth of 1%, reflecting a volatile economic environment, while Europe saw a smaller increase of 1.4% after a slow start to the year.

Global car production also grew, rising 4.2% to 78.7 million units. Asia continued to dominate output with a 62.1% share, compared to 14.6% for the EU.

Europe’s production base under pressure

Car manufacturing in the EU remains concentrated, with Germany accounting for 21% of vehicles produced, followed by Spain, Czechia, France, and Slovakia. EU manufacturers still supply 73% of the bloc’s market.

At the same time, imports are reshaping the competitive landscape. Chinese-made vehicles now represent 7% of EU sales, highlighting the growing presence of Chinese brands in Europe.

While China’s production surged by 10.4% in 2025, supported by policy measures and export growth, European output remained relatively flat due to high energy costs and tariff pressures. Nevertheless, EU-made cars continue to see strong international demand, with more than one-third exported outside the bloc.

Trade headwinds intensify

The EU automotive sector faced mounting trade challenges in 2025. Imports declined by 3.2% and exports by 6.2%, reducing the trade surplus to €76 billion.

Trade relations with China showed a widening imbalance, as EU exports to China dropped by 43% while Chinese imports into Europe exceeded 1 million units for the first time. Exports to the United States also fell by 21.4%, reflecting the impact of tariffs introduced in 2024.

Türkiye emerged as a notable growth market, with EU export values rising by 27.9%.

Commercial vehicle market declines

Europe’s commercial vehicle sector had a difficult year. Van registrations fell by 8.8% and truck registrations by 6.2%, indicating ongoing challenges in fleet renewal and the transition to zero-emission technologies. Buses were the only segment to grow, with registrations up 7.5%.

Production trends were mixed. Global van production increased by 2%, but Europe saw a 3.6% decline, including a sharp contraction in the UK. EU truck production edged down by 0.8%, while bus production rose by 8.9%.

Trade balances varied across segments, with the van surplus halving, the truck surplus narrowing by 9.5%, and the bus sector recording a €2.9 billion deficit.

ACEA’s report underscores a pivotal moment for the automotive industry. While global demand remains resilient, Europe faces intensifying competition, trade pressures, and the costly transition to zero-emission mobility.