Citi European Automakers: The EU Auto-versus-China Competition Debate – Adding Some Nuance (Aug 12, 2026)
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Abstract
Citi argues that the dominant narrative of a Chinese competitive threat to the European car market, while real, lacks nuance and is not a uniform shock. The market is heterogeneous: mass-market brands and plug-in hybrid (PHEV) SUVs are far more exposed than other segments. In H1 2026 Chinese brands sold over 600,000 units in the EU—an 8.8% share, nearly doubling year-on-year, with monthly share topping 10%—yet about 75% of those sales came from just three names: SAIC, BYD and Chery.
EU battery-electric share has held steady around 14%, while PHEV sales surged 114%, nearly doubling share to 33%. Chinese brands compete mainly on low prices and low monthly payments, with MG, BYD and Chery models selling strongly in Italy, Spain and the UK. Premium Chinese marques remain marginal: Zeekr and Lynk & Co sell about 1,000 units a month and BYD's high-end models only 25-100. Chinese EVs depreciate twice as fast as rivals, inflating leasing costs and offsetting price advantages, while luxury brands benefit from loyalty and residual values. Citi sees relatively lower risk for profit-pool leaders Ferrari, Porsche, Mercedes-Benz, BMW and Audi, without specific ratings or targets.