German car manufacturers significantly strengthened their foothold in the European market last year. Together, Volkswagen, BMW, and Mercedes-Benz achieved a combined market share of 39.9% for new cars sold across the continent in 2025. This represents a robust increase of 1.2 percentage points compared to the previous year, according to the latest data from the European Automobile Manufacturers’ Association (ACEA).
Overall, the European Union saw new vehicle registrations rise by 1.8% to reach 10.8 million units in 2025. While this marks the highest sales figure of the decade, it still lags behind the pre-pandemic level of 13 million cars recorded in 2019. Despite the slow recovery, the data highlights a clear shift in consumer preference toward electrified powertrains.
Strategic Surge in Electric and Hybrid Adoption
The transition to cleaner energy accelerated rapidly throughout 2025. The market share for fully electric cars (BEVs) jumped from 13.6% to 17.4% by year-end. In contrast, traditional fossil fuel vehicles saw their dominance decline significantly. Petrol and diesel cars now account for only 26.6% of the market, down from 33.3% in the previous year.
Hybrid-electric vehicles (HEVs) have now emerged as the most popular choice among European buyers. Not including plug-in hybrids, this segment climbed 3.6 percentage points to capture a 34.5% market share. Consequently, hybrids have effectively dethroned purely gasoline-powered cars as the top power option in the bloc.
Shifting Competition: Tesla Recedes While Chinese Brands Triple
The competitive landscape for Germany’s automotive giants is undergoing a profound transformation. Tesla’s market share collapsed from 2.3% to just 1.4% in 2025. Similarly, the Stellantis group—which includes brands like Renault, Opel, and Fiat—lost ground, with its share falling from 16.4% to 15.3%.
Meanwhile, Chinese manufacturers SAIC and BYD recorded explosive growth. Specifically, BYD tripled its market share to reach 1.2%. SAIC, which owns the MG brand, saw its sales rise by a third, now holding a 1.9% share of the European market. These “new forces” are narrowing the gap with established European leaders through aggressive NEV (New Energy Vehicle) exports.
Economic Headwinds Dampen Long-Term Recovery
Despite the “slight recovery” noted in 2025, industry experts warn that the upturn is moving at a snail’s pace. Constantin Gall from the consulting firm EY noted that broad economic struggles continue to make private consumers and companies reluctant to purchase new vehicles. High inflation and job insecurity remain primary deterrents for potential buyers.
“The high prices of new cars, which are not least due to regulatory requirements, are deterring people,” Gall observed. Therefore, while German manufacturers are currently winning the share war, the total market volume remains under pressure. Finally, the industry looks toward 2026 with caution as the balance between regulatory costs and consumer affordability remains delicate.
