The balance of power in the global car market appears to be shifting in favor of China, with imports of cars and automotive parts from China into the European Union eclipsing EU exports to China for the first time, according to a recent analysis by consultancy EY.
Exports of cars and parts from the EU to China fell by 34% last year to 16 billion euros ($18.5 billion), the report said. Since 2022, exports have more than halved.
At the same time, imports from China rose by 8% to 22 billion euros, turning an export surplus into a deficit within just a few years.
A similar trend is visible at the national level. In Germany, Europe's automotive powerhouse, China was only the sixth-most important export market for the country's manufacturers in 2025.
Although German exports still exceeded imports, the gap has narrowed significantly. Since the peak in 2022, German exports to China have more than halved from around 30 billion euros to 13.6 billion euros, while vehicle imports from China rose by two-thirds to 7.4 billion euros.
If current trends continue, imports and exports could reach parity in 2026, the EY analysis said.
According to EY expert Constantin Gall, Chinese carmakers currently face challenges in Germany, where Volkswagen, Mercedes-Benz and BMW have so far successfully defended their market shares.
In other European markets, however, Chinese manufacturers have already made notable gains.
Competition is expected to intensify further in 2026, increasing pressure on Germany as an automotive production hub, Gall said.
For context, the category of automotive parts includes electric vehicle batteries, a market dominated by Chinese suppliers.
German carmakers and suppliers also operate production facilities in China, where they manufacture for the local market but also export vehicles and components to Europe.
These include models from BMW subsidiary Mini, the Cupra Tavascan SUV from Volkswagen and Smart vehicles produced by Mercedes-Benz together with its major shareholder Geely in Xi'an.
The industry's difficulties and rising competition have already weighed on business. Revenue in Germany's automotive sector fell by 1.6% in 2025 to just under 528 billion euros, while manufacturers and suppliers reported sharp declines in profits.
Employment also dropped significantly in the country. The number of jobs fell by 6.2%, or nearly 50,000, to around 725,000, the lowest level in 14 years.
Several job-cut programs are also underway across the industry, including at Mercedes-Benz, Volkswagen and its brands, as well as suppliers such as Bosch, Aumovio, ZF Friedrichshafen and Mahle.
Suppliers in particular are under growing pressure. Their revenue declined by 4% in 2025, while employment dropped by more than a tenth.
Since 2019, nearly one in four jobs in the supplier sector has been lost, around 73,000 positions in total. Gall said structural change in the industry is accelerating, with the downturn having intensified recently.
According to EY, the reasons for the difficult situation are varied.
In addition to growing competition from China and weaker export markets, demand is being weighed down by a weak economic environment, geopolitical crises and high new car prices.
The slower-than-expected uptake of electric vehicles is creating further challenges, according to Gall, as many companies have made significant investments without seeing the anticipated sales volumes.
Additional disadvantages linked to Germany as a business location, including high costs and bureaucracy, are also contributing to the pressure, Gall said.
