EU auto exports globally fell 6% by value in 2025, but the damage was highly concentrated. Exports to China collapsed 43%, cutting China’s share of EU auto export revenue from 9% to 5%. Bear in mind that the EU car supply chain is deeply cross-border: a “German” or “Slovak” finished car typically contains high-value modules made across several other member states. Even so, the decline shows up most clearly in the two main export hubs: Germany and Slovakia.
The graph shows trade data by value, not registrations. But as a snapshot of what the EU is earning from foreign buyers, 2025 reads like a pivot toward hybrids and EVs in non-China markets, alongside a clear downshift in China’s weight in EU auto export revenues.
In cash terms, the EU exported €10.4bn less in cars overall, and €6.3bn of that drop came from China alone, roughly three-fifths of the total decline.
Outside China, exports were only 3% lower (-€4.1bn). The product mix also rotated: combustion exports fell 15%, while hybrid and electric exports rose 11% (hybrids +16%, electric +5%).
In other words, Europe is exporting more “electrified” cars but the big story in 2025 is that China absorbed far fewer EU combustion-car exports than a year earlier.
Highlights for the quick reader
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Global EU auto exports down €10.4bn in 2025 (-6% vs 2024)
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Exports to China down €6.3bn (-43%)
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Exports excluding China down €4.1bn (-3%)
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China’s share of EU auto exports falls to 5% from 9% in 2024
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EU Combustion-car exports overall down €16.7bn in 2025 (-15%)
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EU Combustion-car exports to China down €5.0bn in 2025(-44%)
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EU Combustion-car exports excluding China down €11.7bn in 2025 (-12%)
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EU Hybrid + electric exports up 11% in 2025, rising by €6.3bn
EU car imports eased in 2025, but the real shift was in the powertrain mix. Total import value slipped to €74.8bn from €76.8bn in 2024 (about -2.5%). Yet the bloc did not simply “buy fewer cars”. It re-priced what it bought.
The graph is trade data (imports by value), not consumer registrations
As a snapshot of what the EU is paying foreign producers for, 2025 reads like a market that is hybridising fast while the all-electric import boom takes a breather, shaped by punitive tariffs and the growing share of BEVs produced inside the EU, while China’s footprint shifts into hybrids rather than disappearing.
The clearest loser is the classic petrol and diesel segment. Combustion-only imports fell to €29.7bn from €33.4bn, a sizable drop in a single year. What replaced it was not battery-electric. It was hybrid. Import value for hybrids rose to €30.2bn from €27.5bn, lifting hybrids to about 40% of EU car import value, up from 36% in 2024. In other words, hybrids have become the biggest slice of the EU’s imported-car spend, just edging past pure combustion.
Battery-electric moved the other way. Total electric-car imports dipped to €14.9bn from €15.8bn, and their share fell to 19% from 21%. The China split is even more telling. Electric-car imports from China fell by 4 percentage points, while hybrids from China rose by 4 percentage points. Meanwhile, electric excluding China gained 2 percentage points, and hybrids excluding China stayed flat year on year.
Put simply, the EU’s “electrified” imports look less China-heavy in BEVs, but more China-heavy in hybrids.
Highlights for the quick reader
The EU is switching from combustion to hybrids faster than from hybrids to full electric, and the China exposure is rotating from BEVs into hybrids.
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EU total car import value: €74.8bn in 2025 vs €76.8bn in 2024 (about -2.5%)
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Combustion-only imports (value): €29.7bn vs €33.4bn (-€3.7bn)
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Hybrid imports (value): €30.2bn vs €27.5bn (+€2.7bn)
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Electric imports (value): €14.9bn vs €15.8bn (-€0.9bn, about -5.7%)
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Within electric-car, imports from China down about €2.5bn (roughly -30%)
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Within electric-cars, imports excluding China up about €1.5bn (+22%)
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Hybrids’ share rose approximately to 40% of EU car import value (36% a year earlier)
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Battery-electric share slipped to 19% (21% in 2024)
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Gasoline/diesel (combustion) share: down 3 percentage points
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Hybrids excluding China: unchanged share vs 2024
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Hybrids from China: +4 percentage points (share)
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Electric excluding China: +2 percentage points (share)
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Electric from China: -4 percentage points (share)
The previous posts looked at EU trade in finished cars. This one adds the missing layer: car parts and components. It matters because Europe’s automotive supply chain is deeply cross-border, and Germany sits at the centre of it, even when final assembly happens elsewhere.
Eurostat’s 2025 numbers show a clear downshift in EU car-part exports. Total exports fell 8.7%, a drop of €4.8bn. Exports to China fell faster: -21% (-€2.01bn). Put differently, China alone explains 42% of the EU-wide drop in car-part export value in 2025.
Now zoom in on Germany, because this is where the supply-chain shock becomes tangible. Germany’s car-part exports fell 11.1% (-€3.2bn), meaning Germany alone accounts for about two-thirds (66%) of the total EU27 decline in car-part exports. And within Germany’s decline, China again does the heavy lifting: exports of German car parts to China fell 20.1% (-€1.7bn). That means China explains 53% of Germany’s drop.
This matters because “parts” are the upstream pulse of the industry. When parts exports fall, it is not just a trade statistic: it signals weaker downstream demand, thinner order books for suppliers, and less utilisation across the network that feeds Europe’s assembly plants. The EU supply chain is integrated, but the exposure is not evenly distributed. In 2025, the numbers say the same thing twice:
Car-part exports are down across the EU, and Germany is where most of the decline is concentrated, with China a decisive driver of that hit.
Highlights for the quick reader
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EU car-part exports: -8.7% in 2025 (-€4.8bn)
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EU exports of car parts to China: -21% (-€2.01bn)
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China explains 42% of the EU-wide drop in car-part exports
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Germany car-part exports: -11.1% (-€3.2bn)
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Germany exports of car parts to China: -20.1% (-€1.7bn)
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China explains 53% of Germany’s drop in car-part exports
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Germany explains 66% of the total EU decline in car-part exports
On 4 April 2025, China added yttrium oxide to its dual-use export control regime, meaning exports require licences. We were curious whether the impact would look the same for the EU and the U.S. Using China Customs monthly exports for yttrium oxide across 2023–2025, we can see the policy fingerprint directly.
The answer is aclear no. That “no” is not just a trade footnote: it is the kind of pattern that geopolitics watchers look for when they ask whether controls are being applied neutrally, or used to shape leverage by destination.
World mine production of yttrium is estimated at 15,000–20,000 tonnes, and most of it is produced in China and Myanmar. Yttrium is used in advanced applications including aerospace and defence, batteries, and optoelectronics, among others.
EU: first a pause, then catch-up
Exports to the EU drop to zero for three straight months (Apr–Jun 2025), exactly when the controls come into force. After that, shipments resume and arrive in batches. Jul–Dec 2025 volumes are roughly unchanged versus Jul–Dec 2024 (223 t vs 218 t). The standout feature is timing:
Over half of 2025 EU volume lands in Nov–Dec, consistent with delayed approvals and later clearance rather than a lasting block.
U.S.: first a pause, then near-stop
The U.S. chart shows a much sharper outcome. After April, exports are essentially shut down: May–Dec 2025 totals 17 tonnes, with only small shipments late in the year.
Where the EU sees a temporary freeze followed by catch-up, the U.S. sees a freeze followed by an extended clamp. Some flows may be re-routed via hubs such as Hong Kong or recorded under neighbouring codes, but none of that changes the main result: post-April 2025 shipments diverge sharply by destination.
Why this matters for prices even if “FOB China price” looks calm
Export controls don’t just change volumes; they split the market into two price zones. Inside China, and on the shipments that do get licensed, unit values can remain in the single digits per kg because those transactions often reflect contract pricing and cleared paperwork.
Outside China, buyers compete for what is already in-country, compliant, and available now. When licences slow or stop, the marginal tonne is priced off scarcity and urgency, not off the Chinese export price. That is how a relatively stable FOB number can coexist with downstream prices that jump by an order of magnitude: distributors and processors sitting on inventory capture a scarcity premium, prompt small lots reprice sharply, and firms pay up simply to keep production lines running.
The conclusion is that one rule can produce two outcomes. The EU pattern looks like licensing friction and batching. The U.S. pattern looks like sustained restriction by destination. That difference is the essence of a choke point: the same input can remain available to some buyers, while becoming scarce for others. In effect, that is where China’s leverage sits.
Notice the 3-year trend
Even before April 2025, shipments were drifting down in both markets. On a simple linear fit across 2023–2025, the EU trend line falls faster (about 17 t per year) than the U.S. (roughly flat because a strong 2024 offsets the 2025 collapse).
The policy shock still matters because it is what makes the EU and U.S. paths diverge so sharply after April.
Over 40% of China’s yttrium oxide shipments to the EU go to Germany, followed by France with 28%. Only four member states import meaningful quantities; in 2025, Spain and Finland imported just 1 tonne each.
The data show that over 90% of the EU’s yttrium oxide sourced from outside the EU comes from China. Eurostat records yttrium compounds in a broader bucket that includes other products, but yttrium oxide appears to account for roughly 70% of the import volume recorded in that category.
In Eurostat, the broad customs category we refer to as “rare-earth chemicals” only became available as a separate CN 8-digit code from 2023. The code covers compounds of europium, holmium, erbium, thulium, ytterbium, lutetium, and yttrium. In our 2025 data, yttrium oxide appears to account for roughly 70% of the import volume recorded in this group.
In 2025, EU imports from China rose sharply in physical terms. Volumes reached 86.4 million tonnes, the highest in this series and up 13.5% from 2024. At the same time, the average unit value fell to €6.5 per kg, down from €6.9/kg a year earlier, and well below the 2022 peak of €8.5/kg.
Put differently, the EU is taking in more goods by weight, but paying less per kilogram on average. That combination matters because it points to intensifying price pressure. Some of it may be straightforward goods disinflation. Some may reflect a shift in the mix towards heavier, lower-value items. Either way, the direction is clear: bigger inflows, lower unit values.
As a caveat, €/kg is a blunt indicator. It mixes true price changes with shifts in the product mix of what the EU imports from China. Still, as a high-level signal, it points to stronger competitive pressure from China-based suppliers in EU goods markets
On 17 February, the WTO circulated a communication submitted by China’s delegation. In our view, its core purpose is straightforward: to protect China’s own policy space.
China’s interest is to shape the reform agenda and slow-roll the parts that target its model, especially subsidies, SOEs and “non-market” narratives. It calls for “guardrails” because it fears plurilateral deals among other members could set de facto standards without China, then pressure Beijing to adopt them later.
By putting Special and Differential Treatment (SDT) at the centre, China aims to preserve policy space while sounding reasonable. The subtext is resistance to any forced “graduation” that would strip China of flexibilities. On new rule-making, Beijing wants to be inside the drafting room. It worries that “green” or “digital” disciplines could evolve into constraints that China would frame as containment of its development model.
China also wants a restored dispute settlement system because it constrains unilateral action. A stronger WTO court raises the cost for the EU or the U.S. to rely on unilateral tools, especially those justified through broad exceptions. Finally, China signals openness to transparency and to discussions on subsidies and industrial policy, but the objective is to steer outcomes away from tight disciplines that would bite Chinese industrial policy.
Overall, the paper reads as a defence of MFN and development flexibilities. China is signalling that it opposes reform paths that dilute MFN through clubs and selective rule-making, and it does not want WTO reform to narrow SDT and industrial policy space in ways that would single China out.
According to the NDRC, the 2025 trade-in scheme to incentivise consumption contributed 0.6 percentage point of the 3.7 percentage points of retail-sales growth recorded in 2025. In other words, if total retail sales grew 3.7% in 2025, growth would have been around 3.1% without the scheme, all else equal. In absolute terms, retail sales increased by about 1,788 billion yuan in 2025 versus 2024. A 0.6pp contribution would correspond to roughly 290 billion yuan of that increase (about 16%).
Economists usually view trade-in schemes as effective at bringing forward durable purchases and changing the product mix, but less reliable as a way to generate large amounts of net new consumption.
China’s National Bureau of Statistics has changed several elements of how it compiles the Consumer Price Index (CPI). From January 2026, the CPI is rebased to 2025, and the consumption basket has been updated, including the item list, the survey outlets, and the category weights.
NBS estimates that the base-period rotation changes the monthly year-on-year CPI by about 0.06 percentage points on average. That does not pin down the exact January impact, but as a rule of thumb it implies that, if January 2026 CPI is reported at 0.2% year on year, the old-method result would likely be around 0.2% ± 0.06pp, or roughly 0.14% to 0.26%.
The PPI has been updated too, the impact is ± 0.08pp
Although China is not a direct party to the military escalation, it sits in the background as Iran’s most important trade outlet, above all for crude oil. That matters for two reasons. First, in a sanctions-heavy environment, trade and shipping routes are part of the pressure points around any crisis. Second, the Iran–China trade relationship is unusually hard to read in the official statistics: Iran’s reported exports to China and China’s reported imports from Iran diverge sharply, largely because a significant share of oil flows can be routed and recorded via intermediaries. The chart below highlights that gap, with the necessary caveats, because it is an eye-catching reminder that in sanctioned trade, the “mirror” can break.
