How Eu Garage Business Can Prepare Under Chinese Ev Overtaking Japanese Share In Market

Hello, Yesa, recent data released by the European Automobile Manufacturers Association (ACEA) showed that among the 31 major European countries, the five Chinese automakers - BYD, SAIC, Geely, Chery and Zeranol - sold a total of 138,410 passenger vehicles by May 2026, a year-on-year increase of 65%. Meanwhile, the total sales of the six Japanese automakers - Toyota, Nissan, Suzuki, Mazda, Honda and Mitsubishi - were 130,424 units, a year-on-year decrease of 3%. For the first time, the share of Chinese passenger vehicles in the European market exceeded that of Japan.  In such situation, what will be the share between Hev, BEV & ICE car in Europe car market in coming 3-5 years? what impact will bring to HEV battery aftermarket sales? how HEV garage business can prepare for this change? thanks

Good, I am happy to answer your question as below:

In the next 3-5 years (roughly 2026–2031), the European new passenger car market is expected to see continued growth in electrified powertrains, with BEVs and (P)HEVs gaining at the expense of pure ICE vehicles, though the transition will be gradual rather than abrupt. Chinese automakers' rise (offering competitive BEVs and increasingly PHEVs/HEVs) is accelerating price pressure and choice, particularly in affordable segments, but EU regulations (CO₂ fleet targets), consumer preferences for hybrids in many markets, and infrastructure /affordability constraints will shape the mix.

Current Baseline (2025–early 2026 data)

• BEVs: ~17–19% market share (strong growth from lower bases in 2024/early 2025).
• Hybrids (mainly non-plug-in HEVs + PHEVs): Hybrids overall ~34–38%+, the most popular choice in many reports. PHEVs around 8–10%.
• Pure ICE (petrol + diesel): Declining to ~30–35% combined.
• Mild hybrids (MHEVs) are also rising as a low-cost efficiency boost for ICE platforms.

Chinese brands (BYD, SAIC, Geely, Chery, etc.) are boosting both BEV and PHEV/hybrid offerings, often at lower prices, helping them surpass Japanese makers in volume recently.

Forecast for 3–5 Years Ahead (~2028–2031)

Expect electrified vehicles (BEV + PHEV + HEV) to dominate new sales (>60–70% combined by ~2030), driven by tightening CO₂ rules (with some flexibilities), falling battery costs, and more affordable models from Chinese and legacy OEMs. Pure ICE will shrink but not disappear quickly due to hybrid pivots and policy adjustments.

• BEVs: Likely to reach 25–40%+ by 2030 (base case around 30–50% in optimistic scenarios), with strong growth in 2026–2028 as more affordable models arrive. Growth is supported by regulation but tempered by range anxiety, charging infrastructure gaps in some regions, and higher upfront costs in lower segments. Chinese makers are a key accelerator here.
• HEVs/PHEVs (hybrids): Strong near-term role, potentially 30–40% combined. Non-plug-in HEVs remain popular for simplicity and no charging needs; PHEVs benefit from incentives and lower perceived risk. Chinese entrants are expanding hybrid/PHEV lines to bypass some EV tariffs and meet demand. Hybrids could peak in share mid-decade before BEVs pull ahead.
• Pure ICE: Expected to fall to 20–30% or lower by 2030, mostly in mild-hybrid forms or specific segments (e.g., certain commercial or long-haul uses). Full phase-out is delayed/postponed in practice beyond 2035 in some scenarios.

Key uncertainties:

Policy changes (e.g., incentive reductions, CO₂ flexibility), economic conditions, battery supply/pricing, and consumer adoption rates. Europe shows regional variation—stronger BEV in North/West, slower in South/East. Chinese competition is likely to make EVs/hybrids more affordable, speeding uptake.

Impact on HEV Battery Aftermarket Sales

Positive in the medium term, then moderating:

• Rising HEV/PHEV new sales will increase the fleet of hybrid vehicles over 3–5+ years, boosting demand for Battery Replacements (HEV batteries typically last 8–15+ years but see aftermarket needs as vehicles age).
• European Hybrid Battery market is projected to grow (e.g., from ~USD 3.2B in 2025 onward). Aftermarket will benefit from an expanding installed base, especially for popular models from Toyota, European OEMs, and new Chinese entrants.
• PHEV batteries (larger) may see more frequent or higher-value service than basic HEVs. However, improving battery durability, warranties, and remanufacturing/recycling could cap per-vehicle revenue.
• Risks: Slower ICE/hybrid phase-out than expected could sustain demand longer; faster BEV shift could cap long-term HEV battery aftermarket growth.

Overall, expect growth in HEV battery aftermarket volume through the late 2020s–early 2030s, followed by stabilization or shift toward BEV battery services.

How HEV Garage Businesses Can Prepare

1. Upskill in Electrified Systems: Train technicians on hybrid/PHEV high-voltage systems, battery diagnostics, inverters, and regenerative braking. Invest in manufacturer-specific training (e.g., Toyota, BYD, VW) and tools for battery testing/repair.
2. Expand to BEV Services: Hybrids are a bridge—position your business for full EVs (battery health, charging systems, thermal management). This future-proofs against the BEV shift.
3. Battery Expertise: Partner with specialists for refurbishment/remanufacturing (often cheaper than full replacement). Build relationships with suppliers for HEV/PHEV packs from Chinese and legacy brands.
4. Diagnostics & Software: Modern vehicles (especially Chinese models) are software-heavy. Invest in advanced OBD tools, calibration equipment, and OTA update capabilities.5
5. Diversify Revenue: Offer fleet services, maintenance packages for electrified vehicles, and accessories (e.g., home chargers). Monitor Chinese brand growth for parts availability and specific repair needs.
6. Regulatory & Market Awareness: Track low-emission zones, incentives, and recycling rules. Emphasize total cost of ownership and reliability in marketing.
7. Partnerships & Scale: Collaborate with reliable business partner like Yesa battery for authorized service or stable battery suppliers. Consider specialization in high-mileage hybrid taxis/fleets.

In summary, the market is hybrid-friendly in the near term (strong HEV/PHEV role) while BEVs scale up, creating opportunities for garages that adapt quickly. Chinese competition will likely make the transition faster and more price-competitive, benefiting consumers but pressuring traditional players. Focus on electrification skills now for long-term resilience. Above Data is based on ACEA, IEA, industry forecasts, and analyst report as of mid-2026. Actual outcomes depend on evolving policies and economics.

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