Why Chinese OEMs are thriving, while established EU car makers struggle

New car sales were down 1.2% year-on-year in the first four months of 2025, despite a 26.4% increase in battery electric vehicle sales to reach 558,262 units and account for a 15.3% share of the EU car market.

Chinese OEMs appear to be winning this battle for zero emission cars, with BYD now outselling Tesla across 28 European nations in April.

The seriousness with which new entrants are approaching the European market is characterised by Leapmotor, which has opened 600 sales and service points across the continent, less than a year after it officially launched its European development plan.

“We are not only scaling our presence but ensuring that Leapmotor owners enjoy comprehensive support and service wherever they are,” said Danilo Annese, Head of Europe Commercial Operations at Leapmotor International.

The amendment grants manufacturers increased flexibility in meeting their emission targets for the years 2025 to 2027, but established European OEMs still face an uphill battle to compete with new entrants.

The German Association of the Automotive Industry (VDA) reports widespread concern among small and medium-sized automotive enterprises (SMEs) about the current economic climate. Nearly half (40%) of the companies surveyed by the VDA had engaged in bank loan negotiations in the previous three months, with 69% saying they had encountered higher interest rates, stricter collateral requirements, and shorter loan terms.

Investment is essential if Germany’s auto industry is to compete in the battery electric market. Yet a new study from JATO Dynamics and Oliver Wyman has exposed an affordability crisis, with the 40% increase in vehicle prices between 2019 and 2024 far outstripping the 24% rise in salaries over the same period. The result is an 11% decline in vehicle affordability and a 22% drop in sales. Crucially, the sub-€30,000 segment has seen the sharpest decline in demand, with many consumers either priced out or forced to shift toward financing and the used car market.

The new federal government sees the fleet sector as key to achieving its zero emission aims, and is introducing accelerated writing down allowances for electric vehicles and changes to the benefit in kind treatment of battery-powered cars at the end of June. Resolving home charging issues could also boost EV uptake, according to a new white paper from Allane Mobility Group. 

This rapidly changing outlook for both new vehicle technology and new vehicle manufacturers intensifies risk for lenders, but there are market niches where asset finance is thriving. Crédit Agricole (CA) Auto Bank has renewed its partnership with the Erwin Hymer Group, one of Europe’s leading manufacturers of caravans and motorhomes, to provide a wide selection of flexible financing options via 400 dealers in the EHG network.