The good news for Europe at the Paris Car Show is sales are racing ahead. The trouble is the Chinese are winning the race and taking all the prizes.

China has doubled the number of brands to 20 displaying their wares at the Paris Car Show compared with the previous show in 2024. Little known brands like Aito, Changan’s Avatr and NEVO are joining the mainstream of BYD, Chery and Geely.

That’s why news from GlobalData that sales in Western Europe rose in September at the fastest pace in nine years and will grow by 3.8% to more than 12.2 million in the whole year, left European manufacturers unmoved. That’s because the Chinese are winning most of the increase. Western Europe includes the five biggest markets of Germany, France, Britan, Spain and Italy.

Germany’s Center of Automotive Management put it this way recently. “Of roughly 500,000 additional sales in January-August (in Europe), 419,000 or 84% went to Chinese groups. Tesla added another 58,000. All other manufacturers combined grew by just 0.3%.” CAM said.

Chester Springs, Pennsylvania-based Auto Forecast Solutions also expects a spurt in European Union growth this year after an anaemic couple of years. AFS expects 5.5% growth this year to over 11.4 million.

“Across the EU, Chinese brands are rising quickly, with BYD growing by 130% and moving into 11th place among all brands, ready to overtake 10th place Hyundai, which was down 30% in August,” AFS said in its October newsletter.

Sales rise as more factories close, jobs disappear

That explains why the traditional business models of German and European automakers are currently too slow and expensive to compete with China’s superior technology and manufacturing efficiency. All the big European players, particularly the biggest Volkswagen, are shutting factories and firing workers, just as the market begins a long-awaited rally.

Europe is fighting back with new models like the Audi A2 E-Tron. There is also Stellantis ’s Citroen concept revival of the 2CV as a cheap concept electric vehicle. Stellantis’s Fiat has the new Grizzly compact SUV which will be sold in the U.S. as the Chrysler Arrow. The Mercedes/Geely joint venture has revived the two-seater Smart as an electric city car. Cars already launched, like the Renault 5, Renault 4, Renault Twingo and Dacia Spring, VW’s ID.Polo, T-Cross, Cupra Raval and Skoda Epiq show the strength of Europe’s revival. (Cupra and Skoda are VW brands. Dacia is Renault’s value brand.)

“The European electrified fightback is truly underway, with cost bases heading toward Chinese standards,” said Schmidt Automotive Research founder Matt Schmidt.

Europe accelerates, but not fast enough

“European prices need to drop further, with the European-made 2CV set to start at €15,000 ($17,000). But it appears that, despite Renault saying they have got development speeds down to two years and aren’t prepared to go below that as they don’t want to risk recalls and poor quality, they still appear off the pace with a lot of concept cars, which Chinese (manufacturers) would whip onto the roads within 12 months while most of those on view in Paris still won’t see the light of day for the next few years,” Schmidt said.

Schmidt said Renault and Stellantis designs often appear “über-retro”, which risks ageing quickly. The Germans, with their more conservative designs, will likely last the test of time better.

“It seems the French are becoming too reliant on retro and risk failing to build beyond it,” Schmidt said.

Zoran Matovic , Managing Director of Auto Business & Enterprise in Serbia said the rapid increase in unknown Chinese brands might be a blessing in disguise for the locals, as they fight amongst themselves to secure basic assets required to succeed in Europe.

“The next automotive battle in Europe may not be Chinese versus Europeans. It may be Chinese versus Chinese. Dozens of Chinese brands are looking at Europe. But they are not only competing for customers, they are competing for the same strong dealers, prime showrooms, experienced staff, the same fleet customers and the same investment capital,” Matovic said in a LinkedIn post.

This will fundamentally reshape Europe’s automotive landscape.

“My view is that established European brands will not disappear, but not all will survive in their current form. Premium manufacturers with strong brand equity, loyal customers and pricing power are better positioned, while mainstream brands operating on thin margins will face significantly greater pressure,” Matovic said in answer to questions.

“However, I don’t see this as simply China versus Europe. The real battle will be between manufacturers that can adapt their business models quickly enough and those that cannot,” Matovic said.

Professor Ferdinand Dudenhoeffer, director of the Center for Automotive Research , said Chinese manufacturers will gain further momentum led by EVs, while Japanese and Koreans, along with multi-brand Stellantis and Germans are set to lose ground. This includes German premium manufacturers.

“By 2027, Xiaomi will emerge as a major competitor to BMW, Audi, and Porsche. European vehicles will also incorporate more Chinese technology—seen, for instance, in the partnerships between Stellantis and Leapmotor or VW and XPeng,” Dudenhoeffer said in an email exchange.

“Even BMW has realized that its conservative approach—engineering everything in-house in Munich—is no longer a viable path forward.”

“The automobile is becoming increasingly Chinese - a trend that is clearly visible in Paris. Electric and intelligent technologies are the new key priorities for vehicle development. The car of tomorrow has Chinese DNA,” Dudenhoeffer said.

The Paris Car Show is at Paris Expo, Porte de Versailles through October 18.