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27 October 2026
The European Union is increasingly reacting to surging Chinese imports. The trade deficit with China hit $404bn in 2025. Automobiles are a particularly sensitive area but an agreement to restrict the flow of Chinese hybrid vehicles into the EU to 350,000 per annum has been deemed acceptable to both parties.
Registrations of Chinese-branded cars in the third quarter of 2026 more or less doubled year on year to take a 12.7% market share. That compares to the 11.9% share of Japanese auto manufactures. The EU is walking a very fine line in trying to support its auto industry without risking trade retaliation from Beijing.
In 2021 Chinese brands accounted for just 1% of European sales while Japan’s automakers have spent decades building their position in Europe. Toyota has sold cars to the EU since the early 1960s and operates plants across the continent, while Nissan Motor Co has built vehicles at its Sunderland plant in the UK since 1986.
Chery, BYD and Geely announced a range of new models at the recent Paris car show. These are competitively priced cars and the temptation to purchase an EV over petrol or diesel, given the stubbornly high oil prices, should not be underestimated.