The three major automotive markets at the end of May 2026
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The three major automotive markets at the end of May 2026
1. The Chinese automotive market:
The Chinese passenger car market contracted by 23.4% in May 2026 compared to May 2025, to 1,443,545 units versus 1,884,003, and by 23.8% over the first five months of 2026 compared to the first five months of 2025, to 6,789,786 units versus 8,915,707. There are no signs of improvement in the market to date, but China forecasts an 11% decline in the market for the year as a whole, which would indicate a partial recovery in the second half.
The Chinese passenger car market contracted by 23.4% in May 2026 compared to May 2025, to 1,443,545 units versus 1,884,003, and by 23.8% over the first five months of 2026 compared to the first five months of 2025, to 6,789,786 units versus 8,915,707. There are no signs of improvement in the market to date, but China forecasts an 11% decline in the market for the year as a whole, which would indicate a partial recovery in the second half.
2. The US automotive market:
The US passenger car market (including pickup trucks) grew by 8.9% in May 2026 compared to May 2025, reaching 1,588,901 units versus 1,459,886, but declined by 4.6% over the first five months of 2026 compared to the first five months of 2025, to 6,538,572 units versus 6,854,877. The US market is catching up somewhat compared to previous months, a consequence of the diminishing impact of the US-Iranian conflict. The coming months are expected to confirm a recovery in the US market.
The US passenger car market (including pickup trucks) grew by 8.9% in May 2026 compared to May 2025, reaching 1,588,901 units versus 1,459,886, but declined by 4.6% over the first five months of 2026 compared to the first five months of 2025, to 6,538,572 units versus 6,854,877. The US market is catching up somewhat compared to previous months, a consequence of the diminishing impact of the US-Iranian conflict. The coming months are expected to confirm a recovery in the US market.
3. The European automotive market (30 countries: EU + United Kingdom + Switzerland + Norway):
The European passenger car market grew by 3.2% in May 2026 compared to May 2025, reaching 1,147,492 units versus 1,112,058, and by 4.5% over the first five months of 2026 compared to the first five months of 2025, reaching 5,815,751 units versus 5,566,338. Unlike the Chinese and US markets, the European market, which is the only one to show cumulative growth, slowed its growth rate in May 2026, while the Chinese and US markets performed better in May 2026 than in April 2026.
The European passenger car market grew by 3.2% in May 2026 compared to May 2025, reaching 1,147,492 units versus 1,112,058, and by 4.5% over the first five months of 2026 compared to the first five months of 2025, reaching 5,815,751 units versus 5,566,338. Unlike the Chinese and US markets, the European market, which is the only one to show cumulative growth, slowed its growth rate in May 2026, while the Chinese and US markets performed better in May 2026 than in April 2026.
The decline in European car sales in China continues
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The decline in European car sales in China continues
- In a Chinese passenger car market in the first 5 months of 2026 that declined by approximately 23% compared to the first 5 months of 2025, non-Chinese carmakers declined by only 13% (representing a loss of 453,000 cars) but unlike Chinese carmakers, this decline dramatically adds to those of previous years.
- As a result, the share of non-Chinese carmakers in Chinese car production is now only 28% this year.
- Among the most significant declines recorded by non-Chinese carmakers in China in the first 5 months of 2026, we note the Volkswagen Group which lost 265,000 cars (-27%) compared to the first 5 months of 2025 , Honda which lost 106,000 cars (-43%), Mercedes which lost 59,000 cars (-26.6%), Toyota which lost 32,000 cars (-5.7%) and BMW which lost 30,000 cars (-12.2%).
- Wuling and Baojun brands (due to their acquisition by SAIC), remains stable at +0%, while two non-Chinese brands managed to sell more cars in China than last year. These are Mazda (+10,000 sales in the first five months of 2026 compared to the first five months of 2025) and, especially, Tesla (+86,000 sales in the first five months of 2026 compared to the first five months of 2025). Mazda is benefiting from the launch of its locally designed electric Mazda 6, while Tesla is benefiting from the launch of the long-wheelbase Model Y (+15 cm) and the restyled Model Y.
- China forecasts an 11% decline in car sales across all brands for the year as a whole.
Tesla aims to produce 375,000 vehicles in Europe by 2027
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Tesla aims to produce 375,000 vehicles in Europe by 2027
- American car carmaker Tesla plans to increase its production volume this year at its factory in Grünheide , near Berlin (Germany), where the Tesla Model Y is produced.
- Currently, the factory is operating at approximately 5,000 vehicles per week, for an annual production rate of 250,000 cars. According to factory management, production volume is expected to increase to 6,200 vehicles per week in July, for a rate of 310,000 cars per year, and then to 7,500 vehicles per week in October, for a rate of 375,000 cars per year. The carmaker is counting on strong and growing demand for electric cars in Europe (including Turkey and the Middle East) and lower prices for its own models to boost production at the Grünheide plant . If this planned production increase for 2026 is achieved as expected, Tesla's German factory could produce 290,000 Model Ys in 2026, 100,000 more than last year.
- Grünheide factory could produce 375,000 Model Ys by 2027, a figure that currently represents the factory's maximum capacity. These goals seem ambitious, given that the competition, particularly Chinese carmakers, will continue to expand rapidly in the all-electric vehicle market.
- In the first 5 months of 2026, Tesla sold 118,000 electric cars in Europe (30 countries! EU + UK + Switzerland + Norway) while Chinese carmakers sold nearly 150,000.
Volkswagen is considering closing 4 assembly plants in Europe
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Volkswagen is considering closing 4 assembly plants in Europe
- The Volkswagen Group has announced plans to cut up to 100,000 jobs worldwide , twice as many as initially planned, and reduce its production capacity by one million vehicles per year (including 734,000 units in Germany), by closing or threatening to close four assembly plants in Germany, which is new, as until now the carmaker had refused to close any factories.
- This tightening of its austerity plan clearly shows the poor health of the Volkswagen Group (particularly within the Volkswagen, Audi and Porsche brands), which is causing concern even in the State of Lower Saxony, which holds 20% of the voting rights in the group and suggests that "Volkswagen's future will not be won by constantly focusing on new factory closures or ever-larger workforce reduction programs."
- The Volkswagen factories threatened with closure would be those of Emden (historical site of the VW Passat which were relocated to Bratislava in Slovakia), Hanover (historical site of the VW Kombi which were relocated to Ford in Turkey), Zwickau (historical site of the Trabant converted into the production of battery electric cars) and Neckarsulm (historical site of the large Audi A6-A7-A8, factory now with significant overcapacity).
- The Volkswagen Group is now considering doing what other carmakers are doing in Europe: producing Chinese cars in its own European factories. It's worth noting that in China, the Volkswagen Group is also facing significant overcapacity due to declining sales in the Chinese market.
The European Commission now wants to tax Chinese PHEVs
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The European Commission now wants to tax Chinese PHEVs
- Passenger cars with plug-in hybrid electric vehicles (PHEVs) were sold in 594,439 units in the first five months of 2026 in Europe (30 countries: EU + UK + Switzerland + Norway) compared to 475,564 units in the first five months of 2025, representing a 25% increase over the period compared to the same period last year.
- Of the 594,439 PHEVs sold in Europe from January to May 2026, 143,239 were of Chinese origin, meaning they were Chinese-made, representing 24% of all PHEVs sold in Europe during that period. Last year, from January to May 2025, only 40,564 PHEVs of Chinese origin were sold in Europe, representing 8.5% of all PHEVs sold in Europe.
- Following the implementation in November 2024 of additional tariffs on imported all-electric vehicles, Chinese carmakers opted to prioritize imports of plug-in hybrid electric vehicles (PHEVs). Consequently, the increase in PHEV sales in Europe during the first five months of 2026 compared to 2025 is primarily attributable to Chinese-made PHEVs (an additional 102,675 units out of a total of 118,875 sales). The sales volume of Chinese-made PHEVs is now very close to that of all-electric vehicles sold in Europe. Thus, Chinese carmakers sold 148,940 all-electric cars in the first five months of 2026 (compared to 74,321 units in the first five months of 2025).
- The European Commission therefore now wants to tax PHEVs from China, in the same way that it had taxed battery electric vehicles from China in 2024.