Mathilde Carlier
Research Expert covering transportation and logistics
Passenger car market in Europe - statistics & facts
The European passenger car market is changing. On December 18, 2023, the European Parliament and the Council of the European Union reached a provisional agreement on new emission standards for motor vehicles. The Euro 7 regulation is the next step towards the EU’s goal to decarbonize its transport sector, which was the second sector with the largest carbon dioxide emissions from fossil fuel combustion in Europe in 2022. Throughout 2022 and 2023, the EU’s plan to ban the sale of internal combustion vehicles was initially met with opposition from some member states. Manufacturers who signed on to the initial proposal have also since expressed reservations concerning the target to reduce fleet emissions from new passenger cars by 25 percent in 2025. These developments led to an increase in the challenges faced by the European passenger car market, which was the second-largest regional market in the world in 2023.
While EV adoption has been slow in Europe, some countries have stood out for their drive towards battery electric power, namely Norway, following decisive policymaking from the government. Battery-electric vehicles have a larger market share in Norway than anywhere else, at 82.4 percent of its 2023 sales. Sweden and Denmark were second and third in the region for their battery electric market share. However, rollbacks in electric vehicle subsidies in countries such as Germany and Norway could impact the growth of the European electric vehicle market.
The European passenger car market will face various challenges linked to regional efforts to decarbonize the transportation sector. The rollback of electric vehicle subsidies has the potential to directly impact this goal. However, consumer preferences for European brands could be favorable to the European automotive industry. An on-going investigation by the European Commission on Chinese EV subsidies could further sway the EV market towards domestic alternatives.
Domestic players benefit from consumer preferences
While Europe was a wide passenger car market, its automotive industry also gained global acclaim. Five of the world’s most valuable automotive brands were subsidiaries of European manufacturers, including two brands from the Volkswagen Group. The Volkswagen Group was also among the carmakers with the highest global sales volume, second only to the Toyota Motor Corporation, and held over a quarter of the European car market in 2023. European consumers’ preference for European car brands contributed to the group’s success. Eight of the 10 best-selling passenger car brands in the EU were domestic marques. Furthermore, in a Statista survey where German consumers were asked how likely they were to purchase a specific car brand again in the future, eight of the 10 most popular answers were European brands.EV subsidy rollbacks could stunt a growing market
While consumer preferences influence the key players in the market, electric vehicles have also been a rising trend in the region. In 2023, non-rechargeable hybrid vehicles and battery-electric vehicles were the second and third propulsion type for new passenger car sales in the European Union, edging out diesel cars. In contrast, the market share of fossil fuel vehicles fell under 50 percent, with new diesel and petrol car sales representing 48.9 percent of the EU market.While EV adoption has been slow in Europe, some countries have stood out for their drive towards battery electric power, namely Norway, following decisive policymaking from the government. Battery-electric vehicles have a larger market share in Norway than anywhere else, at 82.4 percent of its 2023 sales. Sweden and Denmark were second and third in the region for their battery electric market share. However, rollbacks in electric vehicle subsidies in countries such as Germany and Norway could impact the growth of the European electric vehicle market.
The European passenger car market will face various challenges linked to regional efforts to decarbonize the transportation sector. The rollback of electric vehicle subsidies has the potential to directly impact this goal. However, consumer preferences for European brands could be favorable to the European automotive industry. An on-going investigation by the European Commission on Chinese EV subsidies could further sway the EV market towards domestic alternatives.
