Why China's threat to European autos is more nuanced than it looks
XLY•Pressure is strongest in mass-market vehicles
The pressure is most evident in mass-market vehicles, particularly plug-in hybrid SUV models, where Chinese rivals are using aggressive pricing and cheap leasing offers to gain share.
Premium manufacturers appear better protected. Citi argues that strong brands and stronger residual values remain critical in a segment where vehicles are predominantly leased.
"We think luxury models from premium brands, dominating profit pools, should be much less vulnerable, thus reducing relative risks for RACE, Porsche, MBG, BMW, Audi".
China’s threat to European autos is more nuanced than it looks
The dominant narrative that Chinese automakers pose an existential threat to Europe's car industry lacks important nuance, according to Citi analyst Harald Hendrikse.
Chinese brands sold more than 600,000 vehicles in Europe in the first half of 2026, taking market share to 8.8%, with sales growth still close to 100% year-on-year. But Citi argues the gains do not come across the board.
"Whilst the threat to the EU industry is real - this threat is not homogeneous either," he writes.
Around three-quarters of Chinese sales come from just three brands, SAIC 600104.SS, BYD 1211.HK and Chery 9973.HK, while premium manufacturers like Nio 9866.HK and Zeekr have made only limited progress against established luxury brands.
The broker says comparisons with the collapse of Europe's solar-panel industry overlook key differences.
Europe's auto market spans multiple price points, powertrains and brands, while incumbents keep significant advantages in distribution, financing and customer loyalty.
