New car registrations across the European Union plus Britain, Switzerland, Norway and Iceland fell 3.5% year-on-year in January to 961,382 units, according to data published by the European automobile lobby ACEA.
The decline represents the first year-on-year drop since June and was driven by weak demand in several large markets, including Germany, France, Belgium and Poland. Norway experienced the sharpest contraction, with registrations - a commonly used proxy for sales - down roughly 76% versus January 2025.
Petrol-powered vehicles registered a marked reduction in demand, with petrol car registrations falling about 26% compared with the same month a year earlier. The fall was particularly pronounced in France and Germany, where petrol registrations dropped 49% and 30% respectively. Market share for petrol cars fell from nearly one-third of new registrations to just above one-fifth in the latest reporting period.
By contrast, electrified powertrains continued to expand their presence. Battery-electric vehicles rose by about 14%, plug-in hybrids increased by roughly 32% and hybrid-electric cars were up around 6%. Collectively these three categories accounted for 69% of new registrations in January, up from 59% in January 2025.
Company-level results were mixed. Registrations at Volkswagen, BMW, Renault and Toyota decreased by 3.8%, 5.7%, 15% and 13.4% respectively. BYD, the Chinese manufacturer, recorded a substantial increase in registrations, surging 165% year-on-year. Stellantis and Mercedes both posted gains, up 6.7% and 2.8% respectively.
U.S. electric carmaker Tesla continued a prolonged downturn, with registrations down 17% year-on-year in January - the thirteenth consecutive month of declining sales reported by ACEA.
Why this matters
Europe's car sector is undergoing a significant transformation. Traditional automakers face pressure from lower-cost Chinese competitors and a policy environment that has delayed some decarbonisation initiatives, intensifying competitive and strategic challenges. The industry also faces additional uncertainty in trade conditions after the United States Supreme Court on Friday found most U.S. tariffs unlawful, with potential implications for cross-border trade.