The European auto market started 2026 with a decline, as total passenger car registrations across the EU, EFTA, and UK fell by 3.5% to 961,382 vehicles in January. Within the EU alone, the drop was 3.9%.
Volkswagen remained the clear market leader, but Skoda's strong performance saw it jump ahead of Toyota to become one of the month's top growth stories among volume brands. Meanwhile, Chinese automaker BYD continued its rapid ascent, posting 18,242 registrations—a 165% year-over-year increase—and again finishing ahead of Tesla, which saw its registrations fall.
The data highlights a market in transition. While overall demand softened, electrified vehicles maintained significant share, with hybrids being the most popular powertrain. Skoda's rise underscores the importance of value and practicality, while BYD's growth signals intensifying competition from new challengers.
The January results set a cautious tone for the year, with traditional leaders facing pressure from both within their own groups and from fast-growing external competitors.