Chinese auto manufacturers are racing into Europe, but challenges lie ahead
Chinese auto manufacturers are aiming to make major inroads in Europe. They already account for around 6% of total car sales and close to 14% of electric vehicle (EV) sales. But to achieve their ambitions, they will need to navigate a European market that is highly fragmented, tightly regulated, and congested, with sales growth at a standstill.
Chinese auto manufacturers are aiming to make major inroads in Europe. They already account for around 6% of total car sales and close to 14% of electric vehicle (EV) sales. But to achieve their ambitions, they will need to navigate a European market that is highly fragmented, tightly regulated, and congested, with sales growth at a standstill.
Leading Chinese vehicle manufacturers are all increasing their export businesses aggressively, says Xin Gao, a partner at consulting firm Corporate Value Associates (CVA).
Top supplier Chery exported more than 660,000 cars in the first six months of 2025, while BYD shipped over 520,000, according to Gao. Both look set to export a million vehicles by the end of the year. And Europe will be a key destination.
To examine the likely impact of Chinese original equipment manufacturers (OEMs) and their captive finance companies on the European auto market, the Qorus Mobility Community and CVA hosted an online event that featured key industry specialists. Alongside Gao were CVA’s Markus Collet as well as Ronny Seidel from BNP Paribas and Christophe Di Perna from Allianz Partners.
Executives polled at the event are readying themselves for a surge in sales of Chinese vehicles in Europe. Nearly half of them expect Chinese suppliers to account for 25% to 35% of vehicle sales in Europe by 2030 while over a third believe they’ll secure 15% to 25% of the market. Cost positioning will set Chinese OEMs apart from competitors, say the executives. Other likely differentiators will be battery technology and innovation, as well as speed to market.
Key takeaways:
- Chinese OEMs are investing heavily in European sales, support infrastructure, and wider automotive ecosystems, including partnerships with local banks and insurers.
- Vehicle manufacturers from China enjoy strong advantages in manufacturing scale, speed to market, and EV and battery technology.
- Chinese captives bring sophisticated capabilities in product innovation, integrated financing, risk management, and fully digital customer journeys.
- Europe is a challenging market for new entrants because of its stagnant growth, unpredictable regulation, and fragmentation across countries, regulations, and financial services models.
- High total cost of ownership, including insurance, maintenance, and battery repair or replacement, can quickly erode the appeal of competitively priced Chinese vehicles in Europe.
- Chinese OEMs that pair their innovation and manufacturing strengths with local insight, financing, and service through partnerships with banks, insurers, and leasing firms will be best placed to turn Europe into a strategic stronghold.
Check out the event highlights
CVA’s Gao points out that several Chinese OEMs have begun investing in sales and support infrastructure in Europe. He expects further investment to build out their wider automotive ecosystems.
The captive finance arms of Chinese OEMs are also beginning to support the expansion of their parent companies into Europe. Several have already secured ties with local banks and insurers.
Chinese captives boast an array of capabilities
Chinese captive finance firms provide a wide range of capabilities. They include:
- Product innovation: Creating tailored financial products, including used-car financing, specific offers for EVs, and subscription models that match changing customer needs.
- Finance integration: Collaborating with OEMs on vehicle pricing, inventory financing, and channel policies to embed financing across retail sales, after-sales, and vehicle trade-ins.
- Channel penetration: Using standardized workflows, KPI tracking, and tiered channel management to closely align financing and sales.
- Risk management: Combining tools such as down payment controls, residual-value forecasting, and tiered pricing with data-driven models across multiple risk scenarios.
- Digital operations: Providing end-to-end digital journeys, from online applications and auto-approval to e-signature, repayment, and servicing, that are integrated with OEM and dealer systems.
Captive finance firms intend employing these capabilities when they follow in the footsteps of their OEMs overseas. However, their strategies for delivering these capabilities will differ with some firms focusing on business development while others concentrate on internal management or operational support, says Gao.
Firms such as Chery FS and Lynk & Co are investing heavily in technologies such as artificial intelligence (AI) to enhance their operational support. Key AI applications include compliance monitoring, asset management, customer service, risk management, and credit assessments.
Christophe Di Perna, head of special projects at global insurance and assistance provider Allianz Partners, adds that one of the major advantages of Chinese OEMs is their manufacturing scale and the speed they can develop and deliver new products. Their gigafactories can produce cars in less than two years from concept to production.
Europe’s shift towards electric vehicles will likely favor Chinese OEMs because they are already leaders in the development and production of EVs and batteries. Markus Collet, CVA partner responsible for its Automobility Platform, adds that this advantage could increase as new generation electric vehicles become software-defined vehicles (SDVs).
While Chinese OEMs are deploying considerable resources to expand their presence in Europe, the road ahead is far from smooth.
Chinese OEMs must navigate big obstacles in Europe
Ronny Seidel, Global Head of Commerce (Mobility) at BNP Paribas Personal Finance points to several obstacles that could hinder the progress of Chinese OEMs.
“Europe is a very competitive market. Regulation is unpredictable. And it's a market which is not growing. It hasn't been growing for the past few years. It's probably not going to grow for a few years to come.” (16:29)
Seidel adds that entry into Europe is further complicated by the fragmented structure of the market.
“Europe does not exist. Europe is the sum of individual countries with very specific local realities, in particular when it comes to regulation, financial services, and how users are going to consume financial services.” (16:29)
French financial services multinational BNP Paribas is working with several Chinese automotive companies in China as well as in Europe.
Seidel says Chinese OEMs, as well as auto manufacturers from other countries, adopt one of two strategies when they expand into Europe. They either focus on the short-term and market cars to fleet operators and rental firms at very reduced prices. Or they take a long-term view and invest in high-quality dealer networks and after-sales support services for retail customers.
To build strong dealer networks OEMs should back their sales channel with financing and after-sales support, says Seidel.
“We don’t talk enough about financing stock. The average quality of dealers in Europe has been decreasing over the last two years because of increasing interest rates and in some markets buybacks.” (16:32)
Seidel adds that financing and after-sales support in Europe are more complex than in China.
Di Perna at Allianz Partners says the total cost of ownership is especially important to buyers of vehicles in Europe.
Battery repair and replacement costs are likely to become especially important factors in total cost of ownership calculations as EVs become increasingly common. The battery can account for as much as 30% of the value of a new EV.
To overcome the obstacles that threaten to impede their progress in Europe, Chinese OEMs are likely to seek stronger ties with local service providers. Both BNP Paribas and Allianz Partners expect closer relationships with Chinese auto manufacturers.
However, considerable uncertainty faces both Chinese and local companies in the European auto market.
“There's uncertainty around EVs. There's uncertainty about how the European market is going to be regulated. There is the uncertainty about how persistent Chinese OEMs are going to be in Europe,” says CVA’s Collet. (51:30)
As Chinese OEMs look to drive up sales in Europe, they will need to match their innovation and manufacturing strengths with local insight, financing, and service capabilities. By working closely with established banks, insurers, and leasing companies, they will be well placed to turn a complex, fragmented, and low-growth market in Europe into a strategic stronghold.
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