JPMorgan Autos & Auto Parts: Implications for Japanese Automakers of the EU-China Agreement to Restrict Chinese HEV/PHEV Imports
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JPMorgan assesses the implications for Japanese automakers of a practical agreement between the European Commission and the Chinese government to cap Chinese HEV and PHEV imports into the EU, expected to take effect from 2027. The proposed annual ceiling of 350,000 units compares with 570,000 HEV/PHEV imports in January-August alone—already above the cap—while China's EV exports to the EU reached 851,000 units in 2025. Restricting Chinese HEV/PHEV inflows would ease competitive pressure in Europe and could benefit Japanese automakers: Toyota, Nissan and Mazda derive roughly 11%, 10% and 13% of sales from Europe, respectively, and hybrids account for nearly 60% of Toyota's European sales, offering potential upside. The offsetting risk is that excess Chinese capacity redirects toward ASEAN and Australia, intensifying competition for Japanese OEMs in those markets. For context, China exported more than 7 million vehicles in 2025 and 2026 volumes are tracking at a 10 million annualized rate. The report lists coverage but offers no specific stock recommendations.
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