Global automotive market 2025: why is Asia driving almost all the growth?
Global car sales are expected to increase by 1.5% in 2025, bringing the market close to 90 million vehicles.
At global level, that makes 2025 look like a positive year for the automotive industry.
But the headline figure hides three very different trajectories.
Asia is accelerating: China is expected to reach 27 million units, up 4.5%, Japan is growing by more than 4%, and India is set to pass the five-million-vehicle threshold for the first time.
Europe is broadly flat at 11.3 million vehicles, while the United States is expected to decline by 2.5% to around 15.5 million units.
Why are Western markets losing momentum? What does India crossing five million vehicles mean for the industry? And why does Europe remain structurally below its pre-pandemic level?
Key figures for the global automotive market in 2025
| Market | Expected volume | Change |
|---|---|---|
| World | nearly 90 million | +1.5% |
| China | 27 million | +4.5% |
| United States | around 15.5 million | -2.5% |
| Europe | 11.3 million | stable |
| India | more than 5 million | +3% |
| Japan | — | +4% |
China has been the world’s largest car market since 2009
With 27 million vehicles expected in 2025, China alone represents close to 30% of the global automotive market.
That is more than the United States and Europe combined.
China’s leadership is not new. It has been the world’s largest car market since 2009.
What stands out in 2025 is therefore not the country’s number-one position but the fact that such a large market is still growing by 4.5%, while mature Western markets are stagnating or declining.
Strong domestic demand is also accompanied by extraordinary industrial scale.
China produces close to 30 million vehicles a year, accounting for roughly 40% of global automotive production.
India crosses a major threshold
India passing five million vehicles for the first time is one of the most important developments in the 2025 market.
It is a symbolic threshold, but also an industrial one.
A domestic market of this scale is large enough to justify:
– dedicated production lines;
– market-specific vehicle ranges;
– local supplier ecosystems;
– long-term industrial investment.
With growth of around 3% and vehicle ownership still relatively low compared with the size of its population, India retains a potential for expansion that mature automotive markets no longer have.
Why are Western markets losing momentum?
The United States and Europe are both under pressure, but for different reasons.
In the United States, trade policy is weighing on the market
The US market is expected to decline by 2.5% to around 15.5 million vehicles.
One of the main factors is the impact of tariffs.
Tariffs can increase the cost of imported vehicles and components, disrupt supply chains and ultimately affect both retail prices and sales volumes.
The US slowdown therefore has a strong trade-policy dimension.
In Europe, weakness has become structural
Europe is expected to remain broadly stable at 11.3 million vehicles.
But that stability can be misleading.
The European market remains well below the levels recorded before the pandemic.
In other words, Europe is no longer contracting sharply but it is not recovering either.
It appears to have settled on a structurally lower plateau than before 2020.
National markets also differ significantly.
France has been declining, while Spain has performed more strongly.
This highlights an important reality: there is no single uniform European car market, but rather a collection of national markets with different economic conditions and consumer dynamics.
What this global shift means for Europe’s automotive industry
Three lessons emerge.
Global automotive growth no longer automatically benefits European manufacturers
Growth is increasingly concentrated in markets where European brands face intense competition from well-established local manufacturers.
The geographical centre of market expansion is moving towards Asia.
Europe’s weak new-car market slows fleet renewal
A stagnant new-car market means older vehicles remain on the road for longer.
Europe’s existing car fleet is already around 12.5 years old on average.
Slower renewal therefore affects not only the industry but also the pace of the energy transition.
Part of Europe’s weakness reflects delayed demand rather than lost demand
Economic uncertainty can encourage households to postpone major purchases such as cars.
That does not necessarily mean consumers have abandoned these purchases permanently.
In many cases, the demand still exists it has simply moved into the future.
FAQ – Global automotive market 2025
Why is the global automotive market growing while Europe stagnates?
Growth is being driven mainly by Asia. China is expected to grow by 4.5%, Japan by more than 4% and India by around 3%, while Europe remains broadly flat and the United States is expected to decline by 2.5%.
Why is the US automotive market declining in 2025?
The market is being affected in part by tariffs, which increase the cost of imported vehicles and components and can disrupt automotive supply chains.
Why does Europe remain below its pre-pandemic car sales level?
Europe appears to have stabilised at a lower level than before 2020. Current stability therefore reflects an absence of further decline rather than a full return to pre-pandemic market conditions.
Since when has China been the world’s largest automotive market?
China has been the world’s largest car market since 2009. In 2025, it is expected to represent close to 30% of global vehicle sales.
Why is India passing five million vehicle sales significant?
Crossing five million units places India among the small group of markets large enough to justify dedicated production capacity, specific vehicle ranges and major long-term industrial investment.
Key takeaways
Global car sales are expected to reach nearly 90 million units in 2025, an increase of around 1.5%.
But growth is highly concentrated in Asia.
China, the world’s largest automotive market since 2009, is expected to reach 27 million vehicles, up 4.5%. Japan is growing by more than 4%, while India is passing the five-million-unit threshold for the first time, with growth of around 3%.
By contrast, the United States is expected to fall by 2.5% to around 15.5 million vehicles, while Europe remains broadly stable at 11.3 million, still well below its pre-pandemic level.
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