Shut Out of US Market, Chinese Automakers Flock to Europe

PARIS—A record 20 Chinese automakers took part in the Paris Motor Show this year, doubling their presence from two years earlier and accounting for roughly a third of the manufacturers exhibiting at the Porte de Versailles exhibition center.

The Paris Motor Show, the world’s oldest and Europe’s largest, is seen as a key moment for Chinese brands to gain international recognition and prestige, part of a common strategy used by major Chinese companies across sectors to trade on the French capital’s aura.

Since the United States has largely blocked Chinese electric vehicles with 100 percent tariffs, Europe is by far the most lucrative market still open to Chinese automakers, so much so that gaining a foothold there has become a matter of survival for them.

“The Chinese have no point of entry into the United States. That is in fact why, for the past two years, they have been redirecting their entire commercial expansion toward Europe,” Tommaso Pardi, an economist at France’s National Center for Scientific Research and director of Gerpisa, an international automotive research network, told The Epoch Times.

For industry observers, the scale of the Chinese presence in Paris is a sign of a worrying shift.

“If they are investing so massively to be present at the motor show, it is to send messages to competitors, consumers, and public authorities. Their intention is very clear,” Pardi said.

“European carmakers are extremely competitive. However, the Chinese are accelerating and growing.”

Chinese brands captured 10.7 percent of the European car market in the second quarter of 2026, nearly doubling their 5.7 percent share from the same period last year and overtaking Japanese manufacturers, according to Schmidt Automotive Research.

By August, their market share had climbed to nearly 12 percent, Bloomberg reported, citing figures from Dataforce.

The speed of that expansion is particularly striking, according to Bernard Jullien, a French economist at the University of Bordeaux who specializes in the automotive industry.

“Reaching a 10 percent market share took Japanese manufacturers more than 20 years. Here, it is taking four years. So the danger is pressing,” he told The Epoch Times.

The push into Europe comes as Chinese automakers face difficult conditions in their domestic market, where fierce competition and weakening demand have intensified pressure to find buyers abroad.

Passenger car sales in China fell 27 percent in September, while exports exceeded 7.1 million vehicles during the first nine months of 2026, an increase of more than 70 percent from the same period last year, according to the China Association of Automobile Manufacturers.

“Sales in mainland China are running roughly 4.5 to almost 5 million units below last year’s levels,” Thomas Meininger, the German executive director of the light vehicle demand group at forecasting firm Mobility Global, told The Epoch Times.

According to Meininger, Mobility Global estimates that Chinese manufacturers keep making substantial profit margins in Europe, in contrast to the difficult conditions they face at home.

“Europe is an extremely important market for Chinese automakers,” he stressed, explaining that they have now diversified their lineups to cover a wide range of needs, “and they showcase all of it at the show. They are flexing their muscles.”

Hybrids Offer a Way Around EU Tariffs

Brussels has adopted trade measures to protect European automakers from Chinese competition, but they have left major gaps.

In October 2024, the European Union imposed additional tariffs of up to 35.3 percent on Chinese-made electric vehicles, on top of the existing 10 percent import duty. This decision followed a European Commission investigation that found Chinese manufacturers received unfair subsidies from the communist regime.

Nevertheless, hybrid vehicles are exempt from the tariffs, giving Chinese carmakers another way to expand in Europe.

EU imports of Chinese hybrids almost tripled, rising from 107,000 vehicles in 2024 to 302,000 in 2025, according to Eurostat figures cited by China’s Ministry of Commerce. Chinese customs data also show that the value of hybrid exports to the EU tripled in the first half of 2026, reaching $7.5 billion.

The sharp increase has pushed Brussels to consider new restrictions.

Speaking in Beijing on Oct. 9, EU trade chief Maroš Šefčovič announced that the two sides had reached “a shared understanding to moderate China’s export of hybrids and plug-in hybrids to the European Union,” raising “the prospect of cutting China’s exports by more than half.”

Jullien was skeptical that the restrictions would lead to a sharp drop in Chinese sales, and said he was waiting to see the official export caps.

Made ‘With’ China

Chinese investment in Europe is also accelerating. Foreign direct investment from China rose 67 percent to 16.8 billion euros in 2025, with the automotive industry accounting for 45 percent of the total, according to a report by Rhodium Group and the Mercator Institute for China Studies.

But Chinese manufacturers are not the only ones behind this expansion. European automakers are also increasingly partnering with Chinese companies to cut costs and stay competitive.

Stellantis, which owns 21 percent of Chinese automaker Leapmotor, plans to start producing small electric cars in Italy in 2028. The vehicles will use a platform developed with Leapmotor.

French multinational Renault, meanwhile, developed its new Twingo in Shanghai in just 21 months. Around 40 percent of the vehicle’s value, including its battery and motor, comes from Chinese components.

Pardi sees the growing reliance on Chinese technology as a threat to Europe’s industrial future.

“It means that European manufacturers are not developing these platforms,” he said, warning that “they will remain lastingly dependent on Chinese technologies and products.”

He described the appeal of Chinese partnerships as difficult to resist for European manufacturers.

“It is a hard drug for them: Everything you buy in China, including engineering, costs 30 to 40 percent less,” he said.

Industry executives themselves acknowledge the cost advantage. Renault CEO François Provost, who two years ago called for a partnership between Europe and China, told France Info that “the Chinese ecosystem has a cost structure that is 30 to 40 percent lower than ours.”

Pardi argued that European manufacturers also prefer to post large profits and short-term financial gains for the benefit of their multinational shareholders rather than make the long-term investments needed to stay competitive.

“Between 2021 and 2024, European automakers enjoyed record profitability. They invested up to 15 percent of their total assets, where the Chinese invest 30 to 40 percent,” he said.

“Why? Because we remain in a short-term financial logic that focuses on rewarding shareholders, at the expense of investment to keep a strong industry in Europe.”

The consequences are becoming visible in Germany, the heart of Europe’s automotive industry.

Volkswagen Group reported a 14.3 percent decline in deliveries during the third quarter, including a 38.5 percent plunge in China. The company also lowered its 2026 operating margin forecast to as little as 1 percent.

A restructuring plan approved in September aims to restore operating margins to 9 percent by 2030, while cutting approximately 50,000 jobs.

Across Germany, employment in the automotive industry has fallen by 42,300 over the past year to 691,500, its lowest level since 2005, according to the country’s federal statistics office.

Pardi dismissed Volkswagen’s restructuring strategy as “a financial plan, not an industrial plan,” calling it “a form of abdication.”

He further accused European manufacturers of being attracted to what he described as the Apple model:

“I manufacture as much as possible in China,” he said, citing the significant cost difference. “The Chinese guarantee me the supply chains needed to deliver to Europe, and I remain a European brand capable of commanding premium prices from consumers. I’ve hit the jackpot,” he said, describing the thinking behind the strategy.

For Pardi, reversing the trend will require political intervention rather than relying on manufacturers to change course voluntarily.

“We therefore need to put policies in place that will force them to align their short-term economic interests with shared, collective long-term goals,” he said. “Otherwise, we will lose yet another industry to China.”

Jullien was equally critical of the growing number of partnerships between European and Chinese manufacturers, arguing that European companies “should be politically blocked from striking deals with the Chinese.”

Without intervention, he warned, “we will not only see massive exports from China to Europe, but also European companies that rely heavily on Chinese technology and capital.”

Europe Struggles to Mount Defense

The European Commission has been working to strengthen European industry, but disagreements between EU countries have made it harder to agree on how to deal with Chinese competition.

Its Industrial Accelerator Act, proposed in March and championed by French European Commissioner Stéphane Séjourné, would require electric vehicles to contain at least 70 percent European content to qualify for public funding and procurement contracts.

In July, Séjourné warned the European Parliament that the automotive industry was in “mortal danger,” accusing Beijing of pursuing a “predatory strategy.”

Germany has been one of the strongest opponents of these measures, as its major automakers rely heavily on international markets and global supply chains.

German manufacturers also argued that the rules would mainly benefit the French industry, which build most of its vehicles in Europe for the European market, Der Spiegel reported.

In 2024, Berlin voted against the EU’s tariffs on Chinese electric vehicles, while Volkswagen called the duties the wrong approach.

“Germany is at the heart of the problem,” Pardi said. “If we have difficulty today in providing a collective response, it is because Germany is having difficulty giving up a lost paradise.”

But Germany’s position may now be shifting as the job crisis deepens.

On Oct. 5, France and Germany jointly called on the European Commission to take tougher action against unfair Chinese trade practices, including “an immediate cut-off from the internal market if needed.”

Speaking at the Paris Motor Show on Oct. 12, French President Emmanuel Macron said an agreement between Paris and Berlin on “Made in Europe” requirements was “imminent,” though he conceded that there were “political constraints in Germany.”

Jullien believes the deterioration of Germany’s automotive industry has made an agreement more likely.

“The number of jobs destroyed every month in Germany does not look good for political leaders, so it is starting to change the equation,” he said.

Pardi also sees signs of a change in Berlin’s calculations. He argued that German officials are getting concerned that the European Parliament will use the Industrial Accelerator Act to push for stronger measures on industrial sovereignty, potentially at the expense of German manufacturers.

The United States has taken a tougher stance on Chinese automotive technology. Washington has banned Chinese software in connected vehicles starting with 2027 models, while a bipartisan bill in the Senate aims to make the restrictions permanent.

Meininger said the U.S. approach reflects real concerns about the rapid expansion of Chinese automakers around the world.

“The U.S. administration is not wrong when it looks at those regions and sees what is happening there, and then tries to protect its home base and its jobs,” he said, referring to Chinese manufacturers’ growing presence in Mexico, Brazil, and Europe.