The European automotive market witnessed a decline in new vehicle registrations in January 2025, marking a 1.9% decrease compared to the same period last year. Data from JATO Dynamics, covering 28 European markets, recorded 993,068 passenger car registrations, reflecting a slowdown following a strong December 2024.
ICE and PHEV Sales Decline as BEVs Gain Ground
The sharpest drops were observed in internal combustion engine (ICE) vehicles and plug-in hybrid electric vehicles (PHEVs), with registrations falling by 10% and 6%, respectively. However, battery electric vehicles (BEVs) continued their upward trajectory, with over 166,000 units registered, representing a 38% year-on-year increase.
JATO Dynamics’ Global Analyst, Felipe Munoz, attributed the market dip to the discontinuation of incentives and last-minute deals that had boosted December 2024 sales.
Tesla Faces a Steep Decline
Despite the overall strength of BEV sales, Tesla suffered a substantial decline, registering only 9,913 units in January—a sharp 45% drop year-on-year. The decline is largely attributed to the impending model update of the Tesla Model Y and concerns surrounding CEO Elon Musk’s increasing involvement in mainstream politics.
Tesla’s Model Y, Europe’s best-selling vehicle in 2023 and the fourth best-selling in 2024, saw significant sales declines ahead of its anticipated refreshed version. Similarly, the latest Tesla Model 3, introduced in late 2023, registered a 44% drop in sales.
Munoz noted, “Tesla’s drop in registrations is not unusual ahead of a model changeover. However, the declining popularity of its key models in Europe is a worrying trend.”
Chinese Brands Continue to Make Gains
In contrast to Tesla’s struggles, Chinese automakers experienced a breakthrough, registering 37,134 units in January 2025—an impressive 52% year-on-year increase. The market share of Chinese brands rose from 2.4% to 3.7%, positioning them ahead of established brands such as Ford, which registered 35,790 units.
Hybrid models drove the surge in Chinese car sales, with nearly 7,500 hybrid electric vehicles (HEVs) registered, capturing 6.1% of the segment. Plug-in hybrid models (PHEVs) from Chinese brands also saw significant growth, with registrations soaring from 1,276 in January 2024 to 4,035 units in January 2025. The shift in focus to hybrid powertrains follows the European Commission’s decision to impose tariffs on Chinese BEVs.
Volkswagen and Renault Lead Market Growth
Volkswagen Group and Renault Group emerged as the biggest winners in January, recording 5% and 7% growth, respectively. Volkswagen secured a 26.7% market share, registering nearly 265,000 units, while Renault’s volume increased to 98,800 units, driven by strong SUV sales. In contrast, Stellantis registered 154,100 units, marking a 16% decline.
Volkswagen’s growth was fueled by the popularity of its SUV lineup and the success of the Volkswagen ID.7. Meanwhile, Cupra, a subsidiary of Volkswagen, saw a 48% rise in registrations, outpacing its sister brand, Seat. Renault’s SUV sales surged by 48%, with the newly launched Renault 5 contributing 4,000 units.
Dacia Sandero Retains Top Spot Despite Decline
The Dacia Sandero remained Europe’s best-selling car in January, despite a 15% decline in registrations. The Volkswagen Golf secured the second position, maintaining its standing from January 2024. Four new models entered the top 10 rankings: the Dacia Duster (+20%), Volkswagen Tiguan (+45%), Fiat Panda (+10%), and Opel/Vauxhall Corsa (+10%).
Conversely, the Skoda Octavia (-17%), Peugeot 2008 (-10%), Renault Clio (-3%), and Kia Sportage (-15%) exited the top 10 list. Among the top 50 most-registered models, the biggest volume increases were seen in the Volkswagen ID.7, Volkswagen ID.4, Kia Picanto, Volkswagen Tiguan, Skoda Kodiaq, Volkswagen T-Cross, Peugeot 3008, MG ZS, Dacia Duster, and BMW X1.
In contrast, models such as the Tesla Model Y, Peugeot 308, Audi A3, Mini Cooper, Toyota Corolla, Dacia Jogger, Volkswagen Polo, Ford Puma, BMW Series 1, and Ford Kuga experienced the largest volume declines.
As Chinese automakers continue to expand their footprint in Europe and Volkswagen strengthens its position, Tesla faces mounting challenges. The upcoming release of the refreshed Model Y will be a crucial test for the brand’s ability to reclaim its market share. Meanwhile, the transition towards hybrid and electric powertrains will play a significant role in shaping the European automotive landscape in the months to come.
