In 2024, Europe’s car industry still delivered an impressive trade surplus of €93.9bn. But for the first time in years, exports fell. The drop was 7.7%, leaving total exports at €178.2bn. Imports also declined to €84.3bn, but the composition of imports is more troubling: China is shipping in more EVs, Turkey is playing a dual role as both partner and competitor, and the US and UK remain Europe’s largest buyers, though dependence on them is rising. ACEA’s The Automobile Industry 2025/2026 report shows that Europe is still working for global markets, but no longer from a position of dominance. Instead, it faces mounting pressure from rivals and a complicated geopolitical backdrop.
The European auto industry remains the backbone of the EU economy. It employs 13.6 million people, including 2.5 million in direct manufacturing. It feeds public finances, generating over €414bn in tax revenues in 2024 across the largest EU countries, about 4% of all receipts. But what truly defines the sector’s power is its role in global trade. Exports of cars and parts have long underpinned Europe’s trade surplus. In 2024, that surplus held firm but showed cracks. Exports dropped 7.7% from 2023 to €178.2bn. Imports fell 9.1% to €84.3bn. The balance remained positive, yet the trend is uneasy. A €93.9bn surplus is impressive, but no longer a guaranteed safety net.
Historically, Europe has always produced more cars than it consumes. Germany, France, Italy, Spain, the Czech Republic, and Slovakia all built their strength on exports. The United States has always been the largest market, and it still is today. Premium German sedans, Italian sports cars, Swedish brands-all flow across the Atlantic. The size and purchasing power of the US market keeps European plants running at high capacity, offsetting weaker demand elsewhere. The UK is the second pillar. Despite Brexit and new customs hurdles, British consumers still buy European cars in large numbers. Logistics, cultural closeness, and decades of integration make the UK an anchor for Brussels.
But Turkey is emerging as a new force. On one hand, it imports more European cars; on the other, it exports its own vehicles and parts back to the EU. This makes Turkey both a partner and a competitor. Its geography positions it as a hub linking Europe, Asia, and the Middle East. Turkey’s auto industry is growing, and that raises fresh challenges for European producers.
China is the biggest source of pressure. Imports of Chinese EVs into the EU are climbing fast. Europe has made electrification its core strategy, yet a large share of BEVs on its roads comes from abroad. Chinese manufacturers offer affordable, mass-market, and advanced vehicles, while European brands struggle to match their scale. It’s a paradox: the EU pours billions into battery plants and EV platforms, yet its own market is filling with Chinese cars.
The 7.7% export drop in 2024 is tied directly to production. That year, the EU built around 13.8m vehicles, including 11.4m passenger cars. Both figures are down from 2023 and below pre-pandemic levels. Commercial vehicles were especially weak. Truck and van production slipped, and electrification in this segment remains slow, with one exception-buses. Since 2021, the share of electric buses has doubled, offering one rare bright spot.
Employment is closely tied to trade. In Central and Eastern Europe, carmaking accounts for 13–15% of manufacturing jobs. Any dip in exports hits Slovakia, the Czech Republic, Hungary, and Romania quickly. Germany still leads, but its edge relies on premium cars. If demand for high-end models falls in the US or China, German industry would feel the pain.
The fiscal link is just as strong. Of the €414.7bn in auto-related taxes collected in 2024, a significant portion comes from exports. These include VAT on sales, fuel excise, registration fees, and annual ownership taxes. A smaller export base means weaker government revenues.
Innovation is Europe’s main defense. In 2023, the auto industry invested €84.6bn in R&D-34% of all private-sector R&D in the EU. That’s more than pharma and biotech combined. Funds are going into EVs, digitalization, driver-assistance systems, and safety. But even with such spending, Europe struggles to keep market share as Chinese firms advance faster and geopolitical tension grows.
Geopolitics shapes trade more than ever. The US and UK remain vital buyers, but dependence on them is risky. A policy shift in Washington or trade barriers from London could hit exports overnight. Turkey is both a market and a rival. Its growth creates opportunity but also adds competition. And China is the strategic challenge. To be dependent on Chinese EVs while aiming for full electrification is a dangerous contradiction for Europe.
So, 2024 delivered a mixed picture. A €93.9bn surplus proves Europe’s car industry is still powerful. But shrinking exports and rising reliance on outside players point to deeper issues. The EU is still a net exporter, but its position is weakening. The future depends on whether Europe can hold onto the US and UK, build stronger ties with Turkey, and reduce exposure to Chinese EVs.
Possible futures diverge. In the best case, Europe speeds up electrification, evens out charging infrastructure, boosts local BEV production, and keeps its surplus above €90bn. In the worst case, Chinese imports grow, US demand cools, and the surplus falls toward €50–60bn within years. The middle path is gradual decline, with the EU maintaining a positive balance as long as it invests in R&D and defends its export markets.
The bottom line is clear: Europe’s car industry still works for the global market, and it remains the EU’s biggest net exporter. But it does so in a new geopolitical context. Success is no longer guaranteed by tradition and scale alone-it now depends on how Europe manages dependence, competition, and innovation.
Lina Yegil kizi, expert of the portal EconomyKZ.org
