Car Industry 2026 Q1 Update Europe & Africa

Europe

In the Norwegian market, the VAT exemption on EVs was dropped from NOK 500,000 to NOK 300,000 (the VAT rate is 25%), and in mid-January Tesla offered a NOK 50,000 (US$5,200) bonus on its vehicles to offset the drop; good until March 31st and in addition to 0% financing on the Model Y. Norway will end the VAT exemption completely in 2027 (a total increase in the cost of a NOK 500,000 vehicle of NOK 125,000, US$13,000), very significantly reducing EV margins and/or sales in Norway. Other vehicle makers have not equalled Tesla’s bonus.

Tesla Rescued By US-Iran War?

For the first two months of the quarter, Tesla’s European sales were less than for the disastrous first quarter of 2025. Then in March they accelerated to nearly double the previous March, and ended up 47% y-o-y for Q1 at 79,128. Seeming to benefit greatly from the US war of aggression against Iran and the leap in oil prices that drove the already high European gasoline prices even higher. With much spare capacity in its Berlin plant, Tesla was the best positioned to meet the increased demand for electric vehicles.

It being the only brand to reduce prices to offset the additional VAT in Norway (see above) it also kept its sales high in that country. The introduction of the Tesla Model 3 and Y standard RWD editions, which are Euro 5,000 cheaper than the previously cheapest versions with a still good level of equipment (significantly higher than that offered in the US standard editions), will also have helped boost sales. The European standard editions are much better relative value than the US versions. Tesla sales did struggle in Q1 in the UK market, which is the most open to Chinese imports and experiencing a very rapid Chinese brand sales boom; a portent for the future?

March: The Start of a New Trend?

The US war of aggression on Iran, and the accompanying leap in oil prices, seems to have had a major influence on European car sales. With the three big European groups plus Toyota all losing market share:

• VW: 26.2% to 24%, a loss of 2.2% market share

• Stellantis: 17.4% to 14.4%, a loss of 3% market share

• Renault: 9.4% to 9.1%, a loss of 0.3%

• Toyota: 6.9% to 6.4%, a loss of 0.5%

And the beneficiaries? The Chinese brands, Tesla and those providing smaller vehicles:

• Tesla: 1.8% to 3.3%, a gain of 1.5%

• SAIC-MG: 2.2% to 2.4%, a gain of 0.2%

• Geely-Volvo: 2.2% to 2.4%, a gain of 0.2%

• BYD: 1.8% to 2.4%, a gain of 0.6%

• Nissan: 2.1% to 3%, a gain of 0.9%

• Mazda: 1.2% to 1.7%, a gain of 0.5%

Hyundai-Kia, BMW, Mercedes, VW-Audi and even Mitsubishi also gained market share between February and March. With the Strait of Hormuz still closed, and a lengthy period of recovery if/when the Strait is opened, this could be a new trend; a very worrying one for the European “big three” and Toyota. Interestingly, the core VW brand was the worst performing of the VW Group mass market brands.

German Luxury: Less Luxury & Higher Prices

The German luxury manufacturers are busy making their cars less luxury, less visually attractive and even more expensive. The new BMW iX3 and i3 (Euro 60,000 to 80,000) have even more plastic in the interior, and just don’t look that good (especially the iX3). You can buy an Xpeng G6 for as little as Euro 45,000, and it offers a more premium feel and is better equipped. You can also buy a Tesla Model Y Long Range RWD from Euro 49,000. Come the entry of the likes of Xiaomi (2027), Li and Aito (2026) into the European markets, Audi, BMW, Mercedes and Porsche will be in very severe trouble. As they already are in China.

Even the German Centre for Automotive Management (CAM) had to rate BYD as the best in its 2026 Global Automotive Innovation Ranking. With Xpeng #4 and Geely #5. VW and Mercedes #2 and #3, really?

And rate China as far ahead of other nations in automotive innovation, with a huge rise from 2021 to 2023; with the level maintained. Note the fall of the US manufacturers from 2021, and still falling. The German manufacturers fell steeply from 2019 onwards, with little real recovery. The Japanese and Germans are somewhat overrated as their continued work on hydrogen fuel cells is counted as useful innovation rather than a dead end.

German cars, less innovation and more plastic with higher prices (apart from in China). German vehicle development costs are also nearly four times those of China, and the process takes twice as long.

The result:

The average price of an EV in China is around €32,000. In Europe, it is around €66,000. In China, EVs are now cheaper than comparable ICE models. In Germany, they are often much more expensive.

Chinese manufacturers can price below the German (and other European models) in Europe while still paying for freight and Chinese-EV tariffs. And with more and more Chinese factories in Europe, they will not be paying those tariffs. This is why both German and Japanese brands are handing over more and more of their vehicle development and manufacturing to Chinese automakers. With some of the resultant vehicles even finding their way back to Europe, currently a trickle but will that become a trend?

Its also why the German high end luxury vehicles that are still built in Germany (Audi A8, Mercedes S-Class, GLS and EQS, BMW 7-series and X7, Porsche) and the US (the Mercedes GLS & EQS SUV) are finding themselves increasingly priced out of the Chinese market. Apart from Porsche, and the BMW X7 and i7, for which China is no longer the largest market due to falling sales, China is the most important market for the top end models. In 2026, Audi has already ended the manufacturing of the A8 due to falling demand. The German luxury manufacturers have yet to have any success with their electric vehicles.

Interestingly, German consumers have become more and more price sensitive while Chinese consumers have become more and more focused on quality and features. Most probably because cars are already so cheap in China while having become more and more expensive in Germany. Also, because Chinese real wages keep increasing at 4-5% annually, while Western real wages have been, and continue to be, substantially repressed. Less disposable income leads to greater price consciousness. Less and less will consumers in Europe and North America pay premium prices for German “luxury” and “quality”; most especially on the former where the Chinese brands are becoming more and more prevalent. Of the German luxury brands, only VW-Audi and BMW gained market share y-o-y, while Mercedes and Porsche lost market share in the home market. 2027, with the probable mass entry of Chinese high end and luxury brands into Europe will be a hard test of whether or not the German luxury car brands can survive in their present form.

The Chinese To Double Europe Market Share in 2026?

The Chinese brands doubled their sales in Europe in 2025, to gain a 6% market share. BYD’s Hungarian plant will quickly reach an output equal to BYD’s 2025 European sales (all imports) after starting production in Q2 2026. Together with increased imports, BYD could more than double its European sales this year; after a 160% surge in 2025. The company’s Turkish plant is also coming online, with Turkey enjoying a free trade agreement with the EU. Production at Chery’s plant in Spain will also start this year, with a planned capacity of 150,000 vehicles per year; building on its 200% European sales growth last year. Leapmotor will also be producing about 40,000 vehicles annually from its Spanish plant later this year, and Xpeng started local production at a shared Austrian plant late last year. SAIC has recovered from the exceptionally large tariffs levelled against it by the EU and is now growing European sales once again. Geely’s Volvo unit is still struggling, but the Geely Chinese-based brands are now pushing into the European market. Changan is also expanding in the region, while Great Wall Motor and SAIC-MG are still looking for European production locations. With the help of the US war of aggression on Iran, Chinese market share jumped to 9.4% in March. Could the Chinese market share see a more than doubling in 2026? Even GAC is entering the European market, starting with the GAC Aion V BEV SUV which is available for pre-order, for a starting price of GBP 36,450. With a 0-80% charging time of 13 minutes, a WLTP range of 317 miles, and a well appointed interior (including a fridge).

Below is the new Atto 3 EVO with much faster charging, bigger range (316 miles), faster acceleration than its main competitors, and more storage space than those competitors; priced from GBP 39,000 to GBP 42,000. More expensive than its competitors, but with much more standard equipment and a longer warranty. In China it costs the equivalent of US$16,000 (the Yuan Plus), which is less than GBP 12,000, It’s very obvious that the Chinese manufacturers are pricing their cars to be competitive in Europe, but not too competitive. The competitive edge that they provide has to be kept just right, not too cold to not sell, but also not too hot to trigger the protectionist urges of European politicians; boiling the European car makers at a sustainable rate of increase. Now aided by a new surge in EV demand driven by the US-Iranian War related oil price jump. This also provides the Chinese brands with a high level of profitability for their exports. The loss of 6%, or perhaps even more, market share will have to be born by the European, Japanese and South Korean manufacturers; very painful with a Europe most probably in an energy-price driven recession.

The Japanese & South Koreans Continue On Their Exit Path

Only Hyundai-Kia and Toyota of the non-Chinese Asian manufacturers hold a significant European market share. Toyota, with its lack of BEV models, may be the hardest hit by the rise in oil prices. Its market share fell throughout the first quarter. Hyundai-Kia saw a bump in March, but not enough to get above the January market share. Nissan and Mazda got a bump in market share in March, and even Mitsubishi got a little bump after its y-o-y sales collapse. Interestingly, Suzuki and Honda saw no such market share jump.

January, February, March (EU + EFTA + UK)

Overall Sales: 0.961 million (-3.5%); 0.979 million (+1.7%); 1.581 million (+11.1%)

BEV Share: 19.7% (vs. 17% year ago); 19.5% (17.1%); 21.8% (17.1%)

PHEV Share: 10.4% (7.6%); 9.8% (7.5%); 10% (8.4%)

China Share: 7.4% (3.7%); 8% (4.2%); 9.4% (5.2%)

1. VW: 26.7% (-3.8% y-o-y); 26.2% (+2.2%); 24% (+4.8%)

2. Stellantis: 17.1% (+6.7%); 17.4% (+9.5%); 14.4% (+6%)

3. Renault: 8.7% (-15%); 9.4% (-14.3%); 9.1% (+3.4%)

4. Hyundai: 7.6% (-12.5%); 7.2% (-3.6%); 7.4% (+5.5%)

5. Toyota: 7.2% (-13.4%); 6.9% (-3.9%); 6.4% (+4.7%)

6. BMW: 6.9% (-5.7%); 6.7% (-5.7%); 7.1% (+15.4%)

7. Mercedes: 4.5% (+2.8%); 4.5% (-3.9%); 4.7% (+0.3%)

8. Ford: 3.3% (-13.1%); 2.7% (-19.9%); 2.8% (-6.4%)

9. SAIC-MG: 2% (-1.8%); 2.3% (+12%); 2.5% (+3.1%)

10. Geely-Volvo: 2.1% (-14%); 2.2% (-9.6%); 2.3% (+3.4%)

11. Nissan: 2.1% (-17.8%); 2.1% (-16.2%); 3% (-6.8%)

12. BYD: 1.9% (+165%); 1.8% (+162%); 2.4% (+148%)

13. Tesla: 0.8% (-17%); 1.8% (+11.8%); 3.3% (+84.3%)

14. Suzuki: 1.3% (-13.6%); 1.4% (-9.6%); 1.4% (+6.3%)

15. Mazda: 1.1% (-0.5%); 1.2% (-1.9%); 1.7% (+23.3%)

16. Land Rover: 1.1% (-0.3%); 0.7% (+1.2%); 0.6% (+15.3%)

17. Honda: 0.5% (-7.4%); 0.5% (+0.3%); 0.5% (+31.1%)

18. Mitsubishi: 0.2% (-35.1%); 0.2% (-47.6%); 0.3% (-33%)

Note: Chery Group (incl. Jaecoo and Omoda) sold at least 32,000 vehicles in March, a 2% market share, with sales growing at over 200% per annum.

The three biggest markets:

• Germany Q1: 699,404 (+7%)

  The core VW brand, plus Mercedes and Porsche lost market share. SAIC-MG gained with 6,177.

  • BEV: 159,630, up 46% (22.8% share); PHEV: 76,114, up 20% (10.9% share)

    • Tesla 12,829 up 160% (8% BEV share). BYD sales were 9,120 (+700%)

• UK Q1: 614,854 (+5.9% y-o-y)

  Chinese brands (incl. Volvo) share 16.5%; 15.8%; 19%; #1 Jaecoo 7, #6 BYD Seal U, #10 MG HS in March. SAIC MG 23,878, Chery 36,038, Geely 25,106.

  • BEV: 137,614, up 14.5% (22.4% share); PHEV: 78,666, up 46.5% (12.8% share)

    • Tesla 11,739, down 5.9% (8.5% BEV share). BYD 21,337 (+130%).

• France Q1: 422,361 (-2%)

  Stellantis 32.4%; 31.2%; 25.6% share, Renault 26.4%; 24%; 28.2%, Toyota 8.9%; 6.8%; 5.9%.

  • BEV: 116,842 (27.7% share vs. 18%); PHEV: 22,466 (5.3% share vs. 7%)

    • Tesla 14,425, up 115% (12.3% BEV share)

Africa

The Chinese Invasion Picks Up Speed

Ten Chinese brands are gaining market share within Africa, pushing out the European, Japanese and South Korean brands which they outclass with lower prices and better functionality. Also, nearly new Chinese cars from the Middle East are increasingly flowing into Africa.

Strongest in South Africa: January, February, March

Overall Car Sales: 50,073 (+7.5%); 53,455 (+11.4%)*; 48,983 (+19.2%)

1. Toyota 11,786; 12,272; 12,933

2. Suzuki 6,410; 6,562; 4,961

3. Chery 5,211, 5,282; 4,937

4. Hyundai-Kia 4,906; 4,882; 4,576

5. VW (incl. Audi) 4,774; 4,895; 5,014

6. Ford 2,678; 2,928; 2,987

7. GWM 2,521; 2,614; 2,453

8. Isuzu 1,606; 2,371; 1,906

9. Mahindra 1,671; 1,996; 1,234

10. Renault 1,414; 1,424; 1,304

11. Nissan 1,133; 1,204; 1,011

12. BMW (incl. Mini) 1,094; 1,237; 843

Note: Chery includes Jaecoo, Omoda and Jetour

SAIC-MG only just reentered the market but already sold 643 cars in February. BYD is only just ramping up its presence and Geely only entered last November. This year could see a major turnaround in South Africa, with a large growth in Chinese brand market share.

Then in North Africa; Egypt, Algeria, Morocco

Egypt overall cars sales: 10,900 (+43.3%);

Nissan and Hyundai are the #1 and #2, but Chinese car brands are rapidly expanding. Chery and Geely have already opened CKD plants in the country, with both SAIC-MG and BAIC plants planned and a BYD plant rumoured.

Algeria overall car sales in 2025 dropped 52%.

#1 Fiat, #2 Chery, #3 Opel; #4 Geely; #5 Dongfeng Sokon (owned by Seres)

Morocco overall car sales: 20,421 (+36.2%); 17,143 (+8.8%); 24,453 (+19.9%)

The market is dominated by European brands (Renault and its other brand Dacia, Hyundai, Peugeot and VW), but BYD is growing sales from a low base (300 sales in January, 321 in February). Deepal, Chery, Leapmotor, Geely and SAIC-MG have also entered the market. There is no safe place for the European manufacturers.