Market evolution: Hybrid non plug-in passenger cars (CN 870340) — 2015–2025

Introduction

This report examines the evolution of EU trade in hybrid non plug-in passenger vehicles classified under Combined Nomenclature code 870340 over the period 2017–2025. This product category encompasses passenger cars equipped with both a spark-ignition internal combustion engine and an electric motor for propulsion, but explicitly excludes plug-in hybrids (which fall under separate codes). The product definition includes both new vehicles (CN 87034010) and used vehicles (CN 87034090), with the former representing the overwhelming share of trade flows. The data available begins in 2017, providing an eight-year window through 2025.

Over this period, the EU's position in this market has undergone a profound transformation. Starting as a net importer with a significant trade deficit, the EU evolved into a competitive exporter that achieved a structural trade surplus by 2025. This shift was powered by a dramatic scaling of domestic production—from 160,000 units to 1.5 million units—and a reconfiguration of trade geography that diversified both import sources and export destinations. The following three sections detail the main dynamics driving this evolution.

1. From Import Dependency to Export Powerhouse: The Structural Reversal of EU Trade

1.1 The initial import-dependent phase (2017–2019)

In 2017, the EU was a pronounced net importer of non plug-in hybrid vehicles. Imports stood at €4.27 billion, while exports were a modest €408 million, yielding a trade deficit of approximately €3.86 billion. The net import reliance stood at 64.8%, meaning that nearly two-thirds of the EU's domestic consumption in this segment was supplied by non-EU producers.

This situation reflected the state of hybrid technology adoption at the time. Japanese manufacturers—particularly Toyota and its affiliates—had long led in conventional (non plug-in) hybrid powertrains. Japan was by far the EU's largest import source, with €1.60 billion in 2017, followed by Türkiye (€1.13 billion) and the United Kingdom (€1.01 billion). During this phase, EU-based production was nascent: only 160,000 units were manufactured domestically, generating €2.2 billion in output value.

1.2 The inflection point: rapid export growth (2020–2022)

The period from 2020 to 2022 marked a decisive turning point. While imports continued to grow—reaching €16.70 billion in 2022—exports surged at a far faster pace, accelerating from €1.67 billion (2018) to €8.82 billion (2020) and then to €25.49 billion (2022). By 2021, the trade balance had swung decisively into surplus, peaking at €13.76 billion in 2022.

Several factors underpin this reversal. First, EU automakers massively invested in hybrid technology to comply with tightening CO₂ emission standards. Production volumes more than tripled from 490,000 units (2019 estimate based on trajectory) to over 1 million units by 2022, with output value reaching €40 billion at peak. Second, EU manufacturers—led by Germany, Slovakia, Spain, and France—began aggressively exporting to key markets including the United Kingdom, the United States, China, and Türkiye.

1.3 Stabilisation at a mature trade surplus (2023–2025)

By 2023–2025, the market had reached a new equilibrium. Exports stood at €18.47 billion in 2025 while imports totalled €15.57 billion, yielding a trade surplus of €2.89 billion. The net import reliance collapsed from 64.8% to just 0.6%, indicating near self-sufficiency in this segment. The export propensity rose from 17.8% to 56.6%, meaning that more than half of EU production was now destined for external markets. This represents a structural transformation: the EU has shifted from being a technology importer to a competitive producer and exporter of hybrid vehicles.

2. Scaling Production and Reconfiguring the Geographies of Trade

2.1 A nine-fold expansion in EU production

The most striking structural change in this market has been the expansion of EU-based manufacturing. According to production data, output grew from 160,000 units in 2017 to 1.5 million units in 2025—an increase of 838%. In value terms, production rose from €2.2 billion to €32 billion. This expansion was driven by the EU's regulatory environment, which mandated fleet-wide CO₂ emission reductions and thereby incentivised automakers to integrate hybrid powertrains into their mainstream lineups.

New vehicles (CN 87034010) constitute the vast majority of both production and trade. In 2025, new vehicle exports reached €17.66 billion in value and 974,859 tonnes in volume, while used vehicle exports (CN 87034090) accounted for just €805 million and 32,764 tonnes. On the import side, the split is similarly dominated by new vehicles (€15.35 billion vs. €224 million for used), although used vehicle imports have grown at a faster rate—rising from €6.5 million in 2017 to €224 million in 2025, suggesting a nascent but growing secondary market for imported hybrids.

2.2 Shifting geography of import sources

The EU's import geography has undergone significant diversification. In 2017, imports were concentrated among traditional hybrid leaders: Japan (€1.60 billion), Türkiye (€1.13 billion), and the United Kingdom (€1.01 billion). By 2025, while Japan remained the leading source (€4.69 billion, +192%), several new entrants had risen dramatically:

China's emergence is particularly noteworthy. From negligible levels in 2017 (€303,000), Chinese-sourced hybrid non plug-in vehicles reached €1.81 billion by 2025, reflecting the broader wave of Chinese automotive exports to Europe. Mexico's rise similarly reflects the reconfiguration of global automotive supply chains, with North American production increasingly feeding EU demand. The concentration index (HHI) for imports fell from 2,808 to 1,878, confirming this diversification trend.

2.3 The expansion and rebalancing of EU export destinations

EU exports have similarly diversified while becoming more geographically balanced. In 2017, the United Kingdom dominated EU outbound trade at €173 million. By 2025, it remained the top destination (€5.29 billion, +2,956%) but was now joined by a much broader set of markets:

The United States and China—both from near-zero bases—became the second- and third-largest export markets, reflecting EU automakers' success in penetrating major automotive markets with their hybrid offerings. The export HHI fell from 2,709 to 1,412, indicating a substantial reduction in export concentration.

2.4 The role of EU member states as production and export hubs

Within the EU, Germany has emerged as the dominant exporter, growing from €88 million in 2017 to €6.13 billion in 2025 (a 6,897% increase). Slovakia, home to major automotive plants, saw the most explosive growth—from just €54,000 to €5.24 billion. Spain (€16 million to €1.80 billion), Czechia (€42,000 to €788 million), and France (€9.3 million to €1.42 billion) also became major exporters.

On the import side, Belgium remained the largest receiving member state (€1.83 billion to €4.16 billion), likely reflecting the role of Antwerp/Zeebrugge as automotive logistics hubs. Spain's imports grew by 360% to €3.08 billion, while France and Germany also saw strong growth.

3. Price Dynamics, Volatility, and Market Shocks

3.1 Divergent price trajectories between imports and exports

A notable feature of this market is the divergence between import and export unit prices. On a per-tonne basis, import prices remained relatively stable, rising modestly from €12,400/t in 2017 to €13,665/t in 2025 (+10.2%). Export prices, however, started from a similar base (€12,865/t) but peaked at €22,179/t in 2022 before settling at €18,327/t in 2025 (+42.5% overall). When measured on a per-vehicle basis, the gap is even wider: export supplementary prices reached €30,253/unit versus €19,187/unit for imports.

This price premium for EU exports suggests that EU-produced hybrids tend to be positioned in higher market segments—likely reflecting the brand portfolios of German, French, and other European OEMs (premium and upper-market brands). Import prices, dragged down by the growing share of competitively priced vehicles from Asia, have remained more contained.

3.2 Heterogeneous volatility across trading partners

The coefficient of variation (CV) of trade values reveals widely varying degrees of volatility across partners:

Import volatility:

Export volatility:

The very high import CV for China (1.99) reflects the explosive and non-linear growth of Chinese hybrid exports to the EU, rising from near-zero to €1.81 billion over the period. Traditional suppliers like Japan and Türkiye display much lower volatility, indicating more stable and mature trade relationships.

3.3 Identified supply and price shocks

The volatility analysis detected two significant shock events:

1. Korean export price shock (2021): EU exports to the Republic of Korea experienced an abnormal price spike with an abnormality score of 10.8 and a price shift of +62.6%. This occurred in 2021 when global supply chains were under severe stress from semiconductor shortages and logistics disruptions. The shift represented 6.5% of total export value, suggesting it affected a meaningful portion of trade flows.

2. Swiss export price shock (2019): EU exports to Switzerland saw a price abnormality of 3.7 with a +38.0% shift in 2019. This pre-pandemic shock may reflect model-year mix changes or regulatory-driven shifts in the composition of vehicles exported to the Swiss market.

These shocks, while notable, were relatively contained and did not derail the broader growth trajectory.

3.4 The evolution of vehicle mix: new versus used

The segment breakdown reveals a consistently dominant share of new vehicles in both trade flows, but with interesting divergences in used vehicle dynamics:

• Used vehicle imports grew from 977 units (2017) to 31,923 units (2025), a faster relative growth rate than new vehicle imports. This suggests emerging demand for second-hand hybrids, potentially driven by price-sensitive consumers or fleet operators.

• Used vehicle exports similarly grew from 2,364 units to 21,893 units. The per-unit price of used exports (€36,770 in 2025) actually exceeded that of new exports (€30,010), which may reflect the inclusion of premium used vehicles or valuation effects related to market conditions.

Conclusion

The EU market for hybrid non plug-in passenger cars (CN 870340) has undergone a remarkable transformation between 2017 and 2025. What began as a market heavily reliant on imports—predominantly from Japan, with a net import reliance of 65%—has evolved into one where the EU is a competitive producer and net exporter with near-zero import dependence.

Three key findings emerge from the data:

1. Structural trade reversal: The EU shifted from a €3.86 billion trade deficit to a €2.89 billion surplus, driven by a nine-fold expansion in domestic production (160,000 to 1.5 million units). This transformation was catalysed by EU emission regulations that pushed manufacturers to scale hybrid technology rapidly.

2. Diversification of trade geography: Both import and export concentration declined significantly. New import sources—especially China and Mexico—emerged alongside traditional suppliers, while EU exporters penetrated major new markets including the United States and China. Germany and Slovakia have become the EU's dominant export platforms.

3. Price leadership with emerging volatility: EU exports command a per-vehicle price premium over imports, reflecting the positioning of European brands in higher market segments. However, the rapid entry of new trade partners (particularly China) introduces new volatility patterns that differ markedly from the stability of established relationships with Japan or Türkiye.

Looking ahead, the sustainability of the EU's trade surplus will depend on continued investment in hybrid technology, competitive pricing in the face of growing Asian competition, and the broader electrification trajectory that may eventually shift demand away from non plug-in hybrids toward fully electric and plug-in hybrid vehicles.