European car prices will remain under pressure until weak players exit, analyst says

European car prices will remain under pressure until weak players exit, analyst says

Automotive News Europe — 2026-06-11

Automotive Industry

European automakers face a prolonged pricing war that will not ease until weaker competitors exit the market, according to Jefferies analyst Philippe Houchois, who warned that operating margins are unlikely to return to the double-digit levels seen in the early 2020s.

Speaking at the Automotive News Europe Congress here June 10, Houchois pointed to intensifying competition and mounting competitive pressures as key drivers of pricing strain.

After roughly a decade in which automakers prioritized value over volume, European automakers appear to be shifting strategy, Houchois said.

“With more entrants continuing to come into the EU market, pricing discipline is becoming harder to maintain,” he said.

As a result, Houchois warned that operating margins in Europe are unlikely to return to the double-digit levels seen in the early 2020s.

Houchois cited developments in China as a warning signal, noting that vehicle prices there declined about 15 percent between January 2024 and December 2025.

European suppliers helped by Chinese production Europe

Moves by Chinese automakers to build cars in existing European plants to avoid tariffs could ease capacity pressures if no new factories are built, Houchois said.

Leapmotor will build its models in Stellantis factories in Madrid and Zaragoza, Spain, while Dongfeng will assemble larger models for its Voyah premium EV brand in a Stellantis plant in Rennes, France.

China’s Chery is in discussions with Nissan to build cars at the Japanese automaker’s factory in Sunderland, England.

Such a shift could reshape the supplier landscape. Houchois said Chinese suppliers may struggle to replicate their domestic success in Europe, potentially creating openings for established European suppliers.

“Vehicles produced in Europe will depend more heavily on the existing supply base,” he said, adding that this dynamic could spur consolidation, including mergers and acquisitions, among suppliers.

Regulatory flexibility could provide relief

European automakers could get some relief from regulatory flexibility, Houchois said. He pointed to a proposed 10 percent allowance under the EU’s 2035 zero-emissions target — permitting limited sales of internal combustion engine (ICE) vehicles beyond the deadline — which could help extend returns on existing investments.

“Allowing a degree of ICE sales beyond 2035 would support the profit pool from technologies already deployed, even if volumes are structurally lower,” he said, adding that a more lifecycle-based approach to emissions regulation would be more rational.