Chinese automakers surpassed the sales of Japanese brands in Europe’s passenger car market for the first time in May, driven partly by BYD’s strong overseas performance in the first half of 2026.

The change appears in new car sales data for May from the European Automobile Manufacturers’ Association (ACEA). Across 31 major European countries, sales by five Chinese automakers—BYD, SAIC Motor, Geely, Chery Automobile, and electric vehicle startup Leapmotor—increased 65% on the year to 138,410 units.

The combined sales of Japan’s Toyota Motor, Honda Motor, Nissan Motor, Suzuki Motor, Mazda Motor, and Mitsubishi Motors fell 3% to 130,424 units. Chinese players sold 6% more vehicles than their Japanese rivals.

ACEA added three Chinese automakers to its tracking from April and changed its methodology so sales by Sweden’s Volvo Car would count within parent company Geely. Even so, Japanese makers retained a 1% lead in April, selling 127,064 vehicles compared with 125,864 for Chinese companies.

Over the past two years, Nissan saw just two months in which sales rose on the year, compared with five months for Suzuki and seven for Mazda. In contrast, SAIC Motor recorded year-on-year sales growth in 17 months, while BYD—added to ACEA’s statistics in July 2025—saw 11 such months.

Figures released by BYD on July 1 show its overseas sales of passenger vehicles, including pickup trucks, grew 70% on the year to 789,367 units in the January-June period. In June alone, BYD made 44% of its passenger vehicle sales overseas, an increase of 20 points from June 2025.

BYD chairman Wang Chuanfu said at the company’s annual shareholder meeting in early June that “overseas sales in 2026 are expected to reach 1.6 million vehicles.” That would be a jump of more than 50% from 1.04 million in 2025.

The European Union (EU) considers Chinese-made EVs to be unfairly cheap and a threat to the European automotive sector. The bloc levied tariffs on the autos in fall 2024, adding duties of up to 35.3 percentage points to the existing 10% tariff, bringing the top rate to as much as 45.3%.

But Chinese makers still retain a strong cost advantage. The BYD Dolphin Surf Boost, a compact EV, is priced in Europe from EUR 26,990 (USD 30,817.5), 3% cheaper than the similar Renault 5 E-Tech, according to Electric Vehicle Database, an EV price comparison website.

In addition to EVs, BYD is also expanding its Europe-bound exports of plug-in hybrid vehicles, which are not subject to the additional EU tariffs. Across 31 major European countries, BYD’s sales in May grew 140% on the year.

BYD is aggressively expanding overseas because of the slowdown in China’s domestic market. The company’s new car sales for the first half of 2026 totaled 1.8 million units, down 16% on the year. This drop, the first such first-half decline in six years, was due partly to intense price competition and sluggish demand in China.

BYD has focused on Europe because of the revival of EV subsidy programs there. Germany, which abolished EV subsidies in December 2023, introduced a program in January 2026 that provides up to EUR 6,000 (USD 6,850.9) for the purchase of new EVs and plug-in hybrid cars. Sweden also resumed subsidies for low-income households, while Italy expanded its support programs.

Japanese automakers are well regarded for the fuel efficiency of their hybrid vehicles. But because they offer limited EV lineups, they are unable to benefit fully from the incentive programs in European countries.

Beatrix Keim of Germany’s Center Automotive Research notes that when European consumers look to buy an EV, Japanese vehicles are not even considered.

The European market also is growing less important for Japanese players. Nissan’s long-term vision announced in April identified Japan, the US and China as its priority markets, while making little mention of Europe.

To avoid Europe’s additional tariffs, Chinese automakers are becoming serious about manufacturing within the EU. Leapmotor plans to begin assembling sport utility vehicles at a Stellantis factory in Spain.

In April, Chery established its European operations headquarters in Barcelona, Spain. Nissan is set to consolidate two production lines at its Sunderland plant in northern England due to low utilization rates. The two companies are reportedly in discussions about producing Chery vehicles on the production line that would become available through the consolidation.

This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.

Note: EUR figures are converted to USD at rates of EUR 0.88 = USD 1 based on estimates as of July 8, 2026, unless otherwise stated. USD conversions are presented for ease of reference and may not fully match prevailing exchange rates.