Market evolution: Passenger cars (CN 8703) — 2015–2025

Introduction

This report examines the evolution of EU external trade in passenger cars under Combined Nomenclature heading 8703 — covering motor vehicles principally designed for the transport of fewer than ten persons, including station wagons and racing cars. The period 2015–2025 spans a decade of structural upheaval: the aftermath of the Dieselgate scandal, the COVID-19 pandemic, semiconductor shortages, the acceleration of electromobility, and shifting geopolitical trade patterns. Against this backdrop, the EU's passenger-car trade has been reshaped in ways that go far beyond cyclical fluctuations. Three dynamics stand out: a marked decline in export volumes coupled with rising unit values; a revolutionary shift in powertrain composition from diesel to electric and hybrid propulsion; and a profound geographic rebalancing of both import sources and export destinations. The following sections explore each of these in turn.

1. Shrinking Volumes, Soaring Values: The Shifting Macroeconomics of EU Car Trade

The decade under review reveals a striking paradox at the aggregate level: the EU's car trade grew in value while contracting in physical volume. This reflects both a move upmarket and the changing cost structure of vehicle production.

The trade surplus narrowed despite steady export values

Between 2015 and 2025, EU exports of passenger cars rose modestly in value from €149.5 billion to €156.7 billion (+4.8%). However, over the same period, export volumes in tonnes fell from 10.6 million to 9.0 million tonnes (−15.4%), and the number of vehicles exported declined from roughly 7.1 million to 5.5 million units (−21.9%). Meanwhile, imports surged: their value rose from €43.6 billion to €75.1 billion (+72.4%), and import volumes grew from 4.0 million to 5.8 million tonnes (+43.1%). The result was a shrinking of the EU's merchandise trade surplus from €106.0 billion in 2015 to €81.6 billion in 2025, a decline of 22.9%.

Unit values climbed substantially on both sides of the ledger

The divergence between value and volume trends is explained by a sharp increase in unit values. The average export price per tonne rose from €14,062 to €17,431 (+24.0%), while the export price per vehicle climbed from €21,068 to €28,287 (+34.3%). On the import side, the price per tonne moved from €10,776 to €12,981 (+20.5%), and the price per vehicle from €13,723 to €16,605 (+21.0%). Several factors converge to explain this: the general shift towards larger, more technologically sophisticated (and battery-laden) vehicles; inflationary pressures on raw materials and semiconductors, particularly acute during 2021–2022; and a compositional shift towards premium segments, notably visible in EU exports which are dominated by German luxury and upper-range brands.

EU production volumes collapsed while production value rose

EU domestic production of passenger cars tells a similar story of volume decline offset by value growth. The number of vehicles produced fell from 18.4 million in 2015 to 12.6 million in 2025 (−31.5%), yet production value rose from €259.7 billion to €321.0 billion (+23.6%). This combination — fewer but more expensive cars — underscores the premiumisation trend that has characterised the European automotive industry throughout the decade.

Export propensity and trade intensity both increased markedly

Despite declining volumes, the EU automotive sector became more internationally oriented. The export propensity — exports as a share of production — rose from 27.9% in 2015 to 48.7% in 2025 (+74.8%). Similarly, overall trade intensity (the sum of imports and exports relative to production) increased from 34.9% to 58.3%. These figures suggest that while the EU produced fewer cars, a growing share of both output and consumption was channelled through international trade. The net import reliance, negative throughout (confirming the EU's status as a net exporter), deepened from −20.7% to −34.9%, indicating that the EU's net export position strengthened relative to its production base even as the absolute surplus narrowed.

2. The Powertrain Revolution: Diesel's Retreat and the Electric Ascent

Perhaps no single dimension of the EU passenger-car market changed as dramatically between 2015 and 2025 as the powertrain composition of traded vehicles. The data at the subheading level reveals a wholesale restructuring away from diesel and towards electrified propulsion.

Diesel trade collapsed across all engine sizes

In 2015, diesel-powered vehicles dominated EU trade. Imports of mid-range diesel cars (subheading 870332, diesel 1.5–2.5L) stood at 833,276 vehicles and small diesel cars (870331, diesel ≤1.5L) at 435,540 vehicles. By 2025, these had fallen to 230,803 (−72.3%) and 51,216 (−88.2%) respectively. The export side shows an identical pattern: mid-range diesel exports fell from 1,775,486 to 543,679 vehicles (−69.4%). The decline accelerated sharply after 2018, coinciding with the full regulatory and market impact of the Dieselgate revelations and the progressive tightening of Euro 6d emission standards.

Battery-electric vehicles surged from near-zero to mainstream

Battery-electric vehicles (subheading 870380, only electric motor for propulsion) were not separately tracked in 2015–2016, reflecting their negligible trade volumes at the time. By 2017, EU imports totalled just 40,615 vehicles; by 2025, that figure had risen to 789,177 — a near-twenty-fold increase. BEV export volumes followed a parallel trajectory, rising from 56,421 vehicles in 2017 to 783,263 in 2025. In value terms, BEV imports reached €14.9 billion and exports €28.6 billion in 2025, making the BEV segment one of the largest by trade value. Notably, BEV unit import prices peaked at approximately €25,893 per vehicle in 2022 before declining to €18,942 by 2025, suggesting increased price competition — driven in part by the entry of Chinese manufacturers offering more affordable models.

Hybrid-electric vehicles complemented the BEV rise

Non-plug-in hybrid vehicles (subheading 870340, combining a spark-ignition engine with an electric motor, excluding plug-in hybrids) similarly emerged from near-zero to become a major trade category. Imports rose from 230,509 vehicles in 2017 to 811,654 in 2025; exports went from 24,849 to 610,426 over the same period. Taken together, electrified vehicles (BEV + hybrid) accounted for a dominant share of the trade growth in both directions by 2025, while traditional internal-combustion segments contracted.

Small petrol-engined vehicles gained ground as diesel shrank

Within the remaining ICE segments, small petrol cars (870321, engine ≤1.0L) were the only conventional category to see sustained import growth: volumes rose from 329,363 to 773,617 vehicles (+134.9%), reflecting the market shift towards smaller, more fuel-efficient city cars and the regulatory incentive structure favouring low-emission vehicles. Mid-range and larger petrol segments (1.0–1.5L and 1.5–3.0L) saw moderate declines in both trade volumes and values, while the traditional EU export stronghold of large-engined petrol cars (1.5–3.0L, subheading 870323) saw export volumes fall from 2.72 million to 1.55 million vehicles (−43.1%), though it remained the single largest export segment by value (€44.2 billion in 2025).

3. New Maps of Dependency: Geographic Diversification and the China Factor

The geographic landscape of EU car trade shifted substantially over the decade. Import sources diversified, China emerged as a dominant new supplier, and the EU's export relationships with key partners were reshaped by geopolitical and economic forces.

China's rise as an import source was the most dramatic structural shift

In 2015, China accounted for just €99 million in EU passenger-car imports — a negligible share. By 2025, that figure had risen to €13.8 billion, an increase of approximately 13,888%. China's ascent was driven overwhelmingly by the export of battery-electric vehicles, leveraging the country's early-mover advantage in EV manufacturing, battery supply chains, and cost-competitive production. By 2025, China had become the EU's single largest source of car imports by value, overtaking the United Kingdom, Japan, and the United States. The volatility coefficient for Chinese imports was the highest of any major partner at 1.12, reflecting the rapid and non-linear pace of this expansion.

Korea and Morocco also gained substantial market share

South Korean car imports into the EU grew from €3.1 billion to €8.7 billion (+185.2%), driven by the success of Korean OEMs (Hyundai-Kia) in the EV and hybrid segments. Morocco, benefiting from its proximity to the EU and a growing base of automotive assembly plants (including Stellantis and Renault facilities), saw imports rise from €1.2 billion to €4.4 billion (+257.7%). Türkiye similarly grew from €4.3 billion to €10.1 billion (+136.4%), supported by its Customs Union with the EU and expanding production capacity from both domestic and multinational manufacturers.

The United Kingdom declined as both a source and destination

The UK, historically the EU's largest car trade partner, saw its role diminish. Imports from the UK fell from €14.9 billion to €9.9 billion (−33.3%), while exports to the UK declined from €41.3 billion to €36.5 billion (−11.7%). Brexit and the introduction of rules-of-origin requirements under the Trade and Cooperation Agreement likely contributed to this decline, along with structural shifts in UK manufacturing. The coefficient of variation for UK import flows (0.32) was among the highest, indicating considerable instability.

EU exports to China fell sharply, reversing a growth trajectory

In a notable reversal, EU car exports to China declined from €13.2 billion in 2015 to €8.4 billion in 2025 (−36.6%), with a peak of €24.6 billion in the intervening years. This reversal reflects the increasing competitiveness of Chinese domestic manufacturers and the growing preference among Chinese consumers for domestically produced EVs, eroding the market position of European luxury and premium brands.

Import concentration fell as supply sources diversified

The Herfindahl-Hirschman Index (HHI) for imports by value fell from 1,860 to 1,244 (−33.1%), while the export HHI declined from 1,480 to 1,171 (−20.8%). Both figures point to a meaningful diversification of trade relationships. On the import side, the rise of China, Korea, Morocco, and Türkiye diluted the historical dominance of the UK, Japan, and the United States. On the export side, growing trade with Türkiye (€6.8B → €15.6B, +129%), Switzerland (€7.3B → €8.8B, +21%), and several emerging markets partially offset declines in traditional destinations.

Germany remained the EU's car-trade engine but with a reduced footprint

Among EU Member States, Germany remained overwhelmingly the largest exporter, but its share declined: exports fell from €97.8 billion to €80.7 billion (−17.5%). Slovakia (€5.2B → €12.3B, +134.4%) and Czechia (€4.7B → €9.2B, +94.0%) saw the largest gains among EU exporters, reflecting the growing role of Central European assembly plants. On the import side, Slovenia recorded the largest proportional increase (€953M → €3.6B, +279.3%), and Spain saw imports more than double (€4.0B → €10.1B, +152.3%), consistent with its role as a major assembly hub increasingly integrated into global supply chains.

Conclusion

The EU passenger-car trade over 2015–2025 was characterised by three interconnected transformations. First, the aggregate picture shifted from volume-driven trade to value-driven trade: fewer cars were exported, but at significantly higher prices, while imports surged both in volume and value, eroding the EU's traditional trade surplus from €106.0 billion to €81.6 billion. Second, the powertrain mix underwent a revolution — diesel vehicles, once the backbone of EU car trade, saw volumes collapse by 70–88%, while BEV and hybrid vehicles grew from near-irrelevance to dominate the growth trajectory on both the import and export sides. Third, the geographic map of trade was redrawn: China transformed from a marginal supplier to the EU's largest source of car imports in barely a decade, while traditional partners like the UK saw their role diminish. These shifts reflect the combined forces of decarbonisation policy, competitive dynamics in global EV manufacturing, and the post-Brexit reconfiguration of European supply chains. Looking ahead, the EU's automotive trade position will hinge on its ability to maintain export competitiveness in high-value segments while managing growing import dependence in the electrified-vehicle categories — a challenge that is as much industrial-strategic as it is commercial.