Economy 22 January 2025, 4:22pm

Hybrid electric vehicles flourish, electric transformation stalled in Europe

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The European car market barely grew in 2024, while demand for all-electric cars fell, especially in Germany, the largest market, where the end of subsidies has had a strong impact on sales. However, hybrid electric vehicles have flourished, outselling petrol engines for several months and becoming the best-selling power source in the European market during these periods. Meanwhile, Hungary stood out from the EU pack, with new passenger car registrations showing double-digit growth thanks to strong growth in HEV registrations and the success of subsidised electric cars. In terms of manufacturers, there has been an interesting shuffle, with Volkswagen, the largest, still managing to increase its market share, but Japanese and other eastern manufacturers have started to catch up, mostly at the expense of western manufacturers.

EU car market barely grows

In 2024, new car registrations practically stagnated, increasing by just 0.8% to around 10.6 million units, the European Automobile Manufacturers' Association (ACEA) reported. Spain continued to show resilience with a solid 7.1% growth rate. In contrast, declines were observed in France (-3.2%), Germany (-1%), and Italy, with a slight drop of 0.5%.

The Polish, Bulgarian and Hungarian markets, among others, grew well above average last year.

Although there are many more cars on the road in the EU compared to 2022, the market is still more than two million fewer than before Covid 2019.

Battery-electric vehicles (BEVs) remained the third most popular choice among buyers in 2024, even as overall sales declined.

Battery-electric cars remained the third-most-popular choice for buyers in 2024. In December, their market share stood at 15.9%, contributing to a 13.6% share for the full year. However, in the whole of 2024

new bev registrations dropped 5.9%, primarily due to a 27.4% contraction on the german market.

For the Germans, the decline was mainly caused by the end of subsidies for car purchases.

Just an interesting thought experiment. If we take the German market out of the equation for a moment, new registrations would have increased by 5.3% at EU level.

One of the major stories last year was the drop in demand for electric cars. This trend is illustrated in the graph below, which summarises new BEV registrations in recent years. It can be seen that while the EU BEV market grew at a phenomenal 37% between 2022 and 2023, last year saw not just a slowdown but a decline.

Since the other powertrain categories include a negligible number of cars, it can be said that HEVs have helped the EU car market to grow by at least some. While hybrid electric vehicle registrations grew by 20.9%,

the new registrations of virtually all other powertrains fell in 2024.

This of course also had an impact on the market share of each power source category. Although petrol cars continued to account for the largest share of new EU passenger car registrations last year, HEVs have caught up closely, capturing almost a third of the market.

Interestingly for hybrids, their market share in December was 33.6%, the fourth month in a row that they have been ahead of petrol cars.

How did Hungary fare in new EV registrations?

The Hungarian new passenger car market fared better than the EU average.

with a total of 121,611 registrations, up 12.9% year on year.

Compared to European trends, the figures in Hungary are different. The category with the highest growth was the all-electric category, mainly due to the state car purchase subsidy.

The examples of Hungary and Germany show how dependent the electric vehicle market is on various subsidies, as registrations took off as soon as the subsidies started in Hungary, while in Germany (by far the largest EV market in the EU) registrations fell 27.4% last year after the subsidy scheme was scrapped.

While the growth in battery electric vehicle (BEV) registrations is remarkable, the overall picture is that their market share in Hungary was only 7% last year, still half the EU average. By contrast, HEVs are making a big splash in Hungary, and last year we were close to one in two new cars sold in Hungary being a hybrid.

While the share of BEVs was only 6.3% in total new passenger car registrations in Hungary in December 2024, against the EU average of 15.9%, and the share of plug-in hybrid vehicles (PHEVs) was even lower at 4.7% (EU: 8.3%), the share of HEV registrations was a whopping 52.2%, securing Hungary the top ranking in the EU.

As for the combined share of new petrol and diesel car registrations, Hungary is placed in the bottom half of the EU ranking in December with a 35.8% share, ahead of all of its regional peers.

Nagyot mentek a japánok

Volkswagen retained its leading position in the European Union car market in 2024, with 2.8 billion cars registered by the German manufacturer at group level, which corresponds to a 3.2%growth on a year-on-year basis. Stellantis remained second despite the manufacturer's new registrations falling 7.2% last year. Renault took third place on the podium, with registrations up 1.9% in 2024.

The graph below is very similar to the one above, but it shows the percentage market share of each manufacturer in the EU car market. Roughly one in four cars sold in the EU is a Volkswagen.

Japanese manufacturers were the best performers last year, but some Chinese brands also grew (BYD is not a member of ACEA and is not included in the chart). Mitsubishi saw the biggest increase in new car registrations, with Volvo, owned by Geely in China, achieving the second biggest growth, and Honda coming in third. In terms of year-on-year growth, Toyota, the world's largest car manufacturer, came fourth in EU car regs.

The graph below shows the percentage point change in market share for each car manufacturer compared to 2023. These figures suggest that the European car industry had a weak year last year. While Volkswagen and Renault among the major European manufacturers managed to increase their sales substantially and moderately respectively, Stellantis suffered a significant loss of market share, BMW, Mercedes-Benz and, among the US manufacturers, Ford and Tesla also saw their market shares decline.

In comparison, Toyota achieved the largest increase in market share among manufacturers, but several other Japanese and Chinese manufacturers also increased their market share.