Europe’s Car Market Shows Tentative Signs of Recovery
(MENAFN) Europe’s car market showed tentative signs of recovery in 2025, powered by soaring demand for electric vehicles in Germany, according to the European Automobile Manufacturers’ Association (ACEA).
New car registrations across the European Union (EU) rose about 10 percent in September from a year earlier, marking the third consecutive month of gains, the ACEA report released Tuesday showed. That pushed total registrations for the first nine months of 2025 to 8.06 million vehicles, lifting year-to-date growth to 0.9 percent.
The rebound was fueled primarily by battery-electric vehicles (BEVs), which recorded a 24 percent increase in registrations across the EU during the first nine months. Germany led the surge with a 38.3 percent rise, far outstripping other major markets such as Belgium, the Netherlands, and France.
German automakers Volkswagen, BMW, and Mercedes-Benz benefited from the upswing, growing their combined EU market share to 39.6 percent in the first nine months, up from 38.2 percent a year earlier. In contrast, Tesla saw its EU sales fall 39 percent over the same period.
Despite the positive momentum, ACEA warned that the current BEV market share remains “below the pace required at this stage of the transition.”
Constantin Gall from consulting firm EY noted that demand for new cars in Europe “remains weak, with little sign of a sustained turnaround.” He added that consumers remain hesitant to buy due to high prices, political uncertainty, and growing economic and job concerns.
In Germany, BEVs represented 18.1 percent of new registrations in the first nine months, slightly above the EU average, ACEA data indicated. However, weak demand continues to pressure automaker margins amid political debate over the future of combustion engines.
German Chancellor Friedrich Merz has pledged to advocate for easing the EU’s 2035 ban on new combustion-engine vehicles, while Finance Minister Lars Klingbeil is working to extend the vehicle tax exemption for electric cars.
Under the new measure, which has cabinet approval, BEVs registered through 2030—rather than the prior 2025 deadline—will remain exempt from vehicle tax for up to 10 years, with benefits lasting until 2035.
Hildegard Mueller, president of the German Association of the Automotive Industry, stressed that “the measure must be formally enacted as planned this year to avoid uncertainty among consumers and prevent a drop in demand.”
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