(Reuters) -Car registrations across Europe declined in June, with a 4.4% year-on-year drop to 1.25 million vehicles, data from Jato Dynamics showed on Wednesday.

While overall demand softened, Chinese automakers continued to gain ground, taking a record market share and squeezing several established European brands, the research data showed.

WHY IT'S IMPORTANT

Chinese automakers are expanding in Europe, breaking into a market traditionally dominated by European and American brands supported by their cheaper pricing amid a shift towards electric vehicles.

This has stoked trade tensions between Brussels and Beijing, including a row over EU tariffs on Chinese-made EVs, imposed to protect European producers.

BY THE NUMBERS

Chinese brands nearly doubled their combined share of the European market to 5.1% in the first half of 2025, just shy of Mercedes-Benz's 5.2%, the report said.

Registrations of Chinese vehicles surged 91% since the start of the year. BYD, Jaecoo, Omoda, Leapmotor and Xpeng ( XPEV ) were the five names fuelling the surge, with BYD alone registering 70,500 units in the first six months of 2025, a 311% jump from a year ago.

Stellantis ( STLA ) saw the steepest market share decline among major automakers, to 15.3% from 16.7% a year earlier. The second biggest decline came from Tesla, to 1.6% in the half-year period versus 2.4% last year.

Registrations of battery electric vehicles (BEV) surpassed one million for the first time in the first half, with a 25% rise to 1.19 million units - 17.4% of the market.

KEY QUOTES

"Persistently high prices, geopolitical and economic tensions with Europe's trading partners, and the postpandemic market reality are behind the decline," Felipe Munoz, global analyst at JATO Dynamics, said.

"The updated Tesla Model Y has so far failed to provide the expected sales boost for the brand," Munoz said. "At the same time, competition from BYD and Volkswagen Group is making it harder for Tesla to maintain its leadership position."