It was a fascinating year for new car registrations in Europe. Not so much for the volumes, which did not reach pre-pandemic levels, but for the interesting changes and the role of new players.

Overall, according to JATO Dynamics, new car registrations totalled 12.8 million units in Europe, up 14 per cent year-on-year. This is the highest result since the beginning of the pandemic, but still far from the more than 15 million units per year recorded before it.

Germany was the largest market, but did not lead the growth. Most of the development came from increased demand in the UK, France, Italy, Spain, Belgium, Portugal, Croatia and Cyprus.

The electric shock

Much of the increase in the new car market in Europe has been driven by electric cars. In fact, these vehicles recorded a new record market share of 15.7%. With 2.01 million registered units, the total of electric cars almost equalled the diesel car registrations of 2.05 million units. With these results, Europe is confirmed as the second largest BEV market in the world, behind only China with around 5 million units and ahead of the USA with 1.07 million units.

Car market 2023: Winners and losers by auto group and brand in Europe - infographic

The countries where BEVs (Battery Electric Vehicles) grew fastest are Finland, Denmark, Belgium, the Netherlands and Luxembourg. Battery cars were already somewhat popular in 2022, when they reached a double-digit market share. Among the countries where BEVs had a small market share in 2022, Slovenia gained 4 points (from 5.0 per cent in 2022 to 9.0 per cent in 2023), Estonia rose from 3.4 per cent to 6.8 per cent and Latvia from 6.6 per cent to 9.0 per cent.

On the other hand, Croatia, which already had a small market share at 3.2% in 2022, dropped 0.3 points to 2.9%. The market share of electric cars in the UK remained stable (from 16.6% in 2022 to 16.5% in 2023), while Italy continued to show reluctance with just 4.2% (up 0.5 points).

Car market 2023: Winners and losers by model in Europe - infographic

China and Tesla, the game changers

The other big change Europe experienced in 2023 was the take-off of Chinese car brands. Last year, 7 new brands joined the 23 Chinese brands available in 2022. Chinese car brands registered 322,000 units in 2023, an increase of 79%, bringing their market share to a record 2.6% (1.7% in 2022).

However, of these 30 brands, only eight registered more than 1,000 units, with MG accounting for 72% of the total. The British-born brand, wholly owned by China's SAIC and whose cars are designed, engineered and manufactured in China, was the star performer of the year. MG's volume increased from 113,182 units in 2022 to 231,818 units last year, more than doubling. It was the 20th best-selling brand, surpassing Cupra, Suzuki, Mini and Mazda.

Meanwhile, Tesla continued to climb the brand rankings. In 2022 it was the 18th best-selling brand and last year it occupied 16th position, overtaking Nissan and Volvo, registering 362,300 units, an increase of 56 per cent. Tesla's rapid growth allowed it to place the Model Y as the best-selling model in the Old Continent. It was the first time in the history of the European automotive industry that a non-European model led the model ranking and the first time that an electric model led the model ranking.

Car market 2023: Top 10 models overall and electric - infographic

Volkswagen über alles

It was a good year for Volkswagen, whose market share rose from 24.7 per cent in 2022 to 25.8 per cent last year. It was the automotive group with the highest market share gain during the year. The growth was made possible by the good results of Audi, Skoda, Seat and Cupra.

All gained positions, partly due to their electric line-up and partly due to the good offerings of 'old' products such as the Audi A4, A1, Q2 and Seat Ibiza. Other important positive results came from Skoda Octavia and Kamiq, Audi Q4, Seat Ateca and Cupra Leon.

The Volkswagen brand, on the other hand, lost ground: the Golf barely increased its registrations (+4%) and the T-Cross recorded a 5% drop. The brand's electric line did well with the ID.4 in third place in the BEV ranking and the ID.3 in seventh place. However, their direct competitors, Tesla Model Y and MG 4, grew much faster. The Model Y, with an average retail price 15 per cent higher than the ID.4, sold almost three times more than the Volkswagen. The average price of the MG 4 in Germany was 5% higher than that of the ID.3, but the former still sold 8,800 more units than the latter.

Other big winners included Suzuki, thanks to private registrations of the Vitara, Swift, Ignis and S-Cross; the Renault group, due to the relaunch of the Clio (+42%), the good results of the Dacia Jogger (+60%) and the good start of the Renault Austral. The Dacia Sandero was the second most registered car in Europe.

Car market 2023: Top 10 plug-in hybrids - infographic

Stellantis loses share

On the opposite side, there is Stellantis, the car group that lost the most market share. It was the second consecutive loss of market share since its creation in 2021. In that year, Stellantis' market share was 20.3 per cent, then fell to 18.2 per cent in 2022 and last year it remained at 16.6 per cent.

The initial impact of Stellantis as a merger was positive on profitability, but negative on volume and market share. Although FCA and PSA are now earning more than when they were separate, they risk being more vulnerable to the arrival of Chinese brands, and four big Stellantis brands in Europe have lost ground.

The author of the article, Felipe Munoz, is Automotive Industry Specialist at JATO Dynamics