Gasgoo Munich- Tariffs have failed to halt the advance of Chinese automobiles, yet fresh trade barriers are piling up.
In the first three quarters of 2026, China exported 1.83 million vehicles to the European Union—an 87% year-on-year surge that already surpassed the total for the previous year, according to Cui Dongshu, secretary-general of the CPCA's passenger car division. While anti-subsidy tariffs on Chinese-made pure electric vehicles remain in place, rapidly growing hybrid models are now being dragged onto the negotiating table.
For Europe's auto industry, this competition is becoming increasingly difficult to manage. Chinese brands are steadily expanding their share in Europe, yet European automakers remain deeply entangled with China in R&D, manufacturing, and supply chains. Trade frictions keep surfacing, but industrial cooperation remains unavoidable.
As China-EU trade talks reach a tentative stage—though specific disputes remain unresolved—the 9th China International Import Expo (CIIE) kicked off on November 5. Making its debut as an exhibitor was the European Automobile Manufacturers Association (ACEA), the industry body representing Europe's major carmakers.
"Trade measures won't solve all the industry's problems. The auto sector itself needs to play a more active role—conducting research, speaking up, and using professional wisdom to support solutions in international trade," said Zhang Shuo, ACEA's chief representative in Beijing, in an interview with Gasgoo, discussing the industry's role in this context.
After Tariffs, Come Quotas
In October 2024, the EU officially imposed anti-subsidy tariffs on Chinese-made pure electric passenger vehicles. While the extra duties raised the entry cost for some EVs, Chinese car exports to Europe continued to climb.
Data from Cui Dongshu shows that in the first three quarters of 2026, China's exports of plug-in hybrids to the EU jumped 372% year-on-year, while regular hybrid exports rose 91%.
But with that surge, plug-in hybrid exports have also entered the fray of China-EU trade negotiations.
During the second round of China-EU trade and investment consultations in Beijing on October 8 and 9, the two sides reached an understanding on hybrid vehicle trade. Based on 302,000 hybrid vehicles imported by the EU from China in 2025, arrangements were made to adjust this figure upward.
Citing reports on October 12, the EU plans to implement safeguard measures, capping first-year imports of relevant hybrids at 350,000 units, with a 6% annual increase over the subsequent four years. Specific implementation rules are still pending.
Tariffs alter import costs, but proposed quotas go further by restricting import volume.
Under this plan, the 350,000-unit ceiling offers some growth compared to 2025 levels, but it imposes a clear constraint on Chinese hybrids, which had been growing rapidly. Companies now have to consider not just the price of entry, but how many units they can actually get in.
Behind these moves lies the intensifying competitive pressure on Europe's auto industry.
In an October 9 statement, ACEA noted that Chinese brands' share of Europe's conventional hybrid market jumped from 2% in 2024 to 14% in the first half of 2026, while their share of the plug-in hybrid market rose from 2% to 25%.
ACEA Director General Sigrid de Vries warned that a sudden severe imbalance in the European market—triggering a price war similar to what's happening in China—would deal a serious blow to the broader European economy.
ACEA's concerns extend beyond just import volumes; they fear the fierce price competition seen in China could replicate itself in Europe.
However, while voicing these competitive concerns, the association also welcomed the efforts by China and the EU to ease trade tensions through dialogue.
Zhang Shuo described the October talks as "a very important step forward." In his view, negotiations that prevent further trade friction help create space for Chinese automakers to enter the European market in an orderly way and for future industrial cooperation.
Trade consultations are setting the terms for Chinese cars entering Europe. But for ACEA, addressing the specific needs of its member companies in the Chinese market is an equally pressing issue.
One immediate reality is the shrinking market for imported cars.
Imports Are Shrinking—Why Is ACEA Still Talking About Ultra-Luxury Cars?
In 2014, China's vehicle imports peaked at roughly 1.43 million units. By 2025, that figure had slumped to 476,000, a 32.4% year-on-year drop. In the first three quarters of 2026, imports fell further to 288,000 units, down 20.1%.
Over the past decade, China's import car market has contracted significantly. The rise of local brands and shifting consumer preferences are reshaping the high-end automotive landscape.
Image Source: European Automobile Manufacturers Association
Against this backdrop, ACEA is making its CIIE debut as an exhibitor and placing the development of the ultra-luxury car sector high on the agenda.
Why focus on ultra-luxury?
The decline in total imports doesn't mean the regulatory needs for low-volume, high-value models have vanished. More importantly, this dialogue isn't limited to European import brands.
According to ACEA, international brands like Ferrari, Lamborghini, Bentley, Rolls-Royce, Porsche, and Aston Martin, along with the Chinese brand Hongqi Golden Flower, will all participate in this high-level dialogue on the ultra-luxury sector.
The participation of both Chinese and foreign brands pushes the discussion beyond mere import sales figures.
For ACEA, a clearer priority is the regulatory management of small-batch vehicles.
In his view, "Low volume and high value are key characteristics of luxury products. The development of this niche requires a targeted and flexible regulatory framework."
For models with limited sales, fixed costs like type approval and regulatory adaptation are harder to recoup through scale. The challenge is balancing safety and compliance with the specific business realities of these products.
Zhang Shuo noted that regions including Europe, the U.S., Japan, South Korea, and the UK have already established management procedures for small-batch vehicles and accumulated relevant experience.
ACEA plans to lead a working group on luxury car development, inviting Chinese and foreign automakers to propose ideas on Chinese policy and industry development. The dialogue will also extend to motorsport and classic cars.
Unlike the one-off high-level dialogue at CIIE, a working group allows these issues to be channeled into sustained industry research and policy communication.
Individual companies can voice their specific needs, but industry associations can organize diverse participants to study common problems, turning scattered feedback into cohesive industry recommendations.
Yet, improving regulatory conditions is one thing; reversing market demand is another.
More flexible rules for small-batch cars might improve operating conditions, but they can't directly alter consumer choices or single-handedly reverse the broader contraction of the import market.
The working group ACEA is pushing for can address regulatory and operational issues for specific niche products, but it cannot solve the growth dilemma facing the entire import market.
For an industry body, these specific and limited objectives are actually more likely to garner a response through persistent research and dialogue.
From Imports to Supply Chains, What Else Does ACEA Want to Discuss?
Ultra-luxury cars are not the only item on ACEA's CIIE agenda.
On November 5, the association set up the "FUTUREDRIVEN HUB" in Hall 7.2 of the National Exhibition and Convention Center (Shanghai), positioning it as an "industry salon" for the auto sector.
Unlike OEMs focused on showcasing their own products and tech, ACEA aims to use this platform to connect government bodies, industry organizations, think tanks, automakers, and supply chain partners.
Commercial vehicles are another key focus.
Executives from Daimler Truck, Volvo Trucks, and Scania are set to join a high-level dialogue on the future of the commercial vehicle industry, discussing developments in the Chinese market and international expansion.
This mirrors ACEA's focus in Europe, where the association has already been monitoring potential competitive shifts in the bus and truck segments. Meanwhile, international commercial players are still exploring opportunities within China.
Competition and cooperation in commercial vehicles represent just one facet of the complex China-EU automotive relationship. The deeper ties lie in technology development and supply chains.
Zhang Shuo revealed that ACEA has established an "ACEA & Friends" mechanism to facilitate exchanges between international automakers and leading companies in the Chinese automotive supply chain.
The association has also co-authored the "ACEA China Auto Industry Toolbox" with several Chinese automotive think tanks to provide international companies with a reference point for understanding the local industry.
As Chinese suppliers and R&D capabilities increasingly participate in global projects for multinational automakers, international firms need to understand not just product demand in China, but also the technological and supply chain capabilities the Chinese industry can offer.
Zhang Shuo believes that China and Europe still face shared technical challenges in areas like intelligent connectivity and autonomous driving, creating room for cooperation in R&D investment, technology exchange, and regulatory dialogue.
From luxury car regulations to commercial vehicle market development and supply chain exchanges, ACEA's agenda covers diverse ground, yet all touch on specific challenges Chinese and European companies face when operating across markets.
The CIIE offers a platform for dialogue, but the real test lies beyond the exhibition halls: whether the luxury car working group can produce concrete regulatory recommendations, and whether "ACEA & Friends" can drive tangible industrial cooperation.
Trade negotiations can redraw the rules of competition between China and Europe, but the industry issues that lie outside those rules still require the automotive sector to find its own answers.
