The European Union is to cap annual imports of Chinese-built hybrid and plug-in hybrid cars at 350,000, potentially restricting the supply available to dealerships across the bloc from December.
As the UK is outside the EU, the quota will not apply directly to cars imported into Britain but it could make the UK a more attractive destination for Chinese-built vehicles that can no longer be supplied to EU dealerships.
Read What EU curbs on Chinese hybrids could mean for UK dealerships
The four-year safeguard arrangement is expected to more than halve Chinese hybrid exports to the EU compared with the volumes that would otherwise have entered the market.
Around 800,000 Chinese-built hybrid and plug-in hybrid cars had been projected to reach the EU during 2026.
Dealer supply set to tighten
The initial quota which will rise by 6% annually after its introduction could slow the expansion of Chinese manufacturers that have used hybrid and plug-in hybrid models to build European sales while avoiding the additional duties imposed on battery electric vehicles imported from China.
Vehicles manufactured by Chinese brands inside the EU will not count towards the limit, giving manufacturers with European factories a route to maintain growth and accelerate investment in local production.
BYD is developing manufacturing operations in Hungary while its planned plant in Turkey would also give the business access to European markets under existing customs arrangements. Other manufacturers are understood to be considering European assembly as a way to reduce their exposure to trade restrictions.
WTO safeguard avoids tariffs
The quota follows negotiations between European trade commissioner Maroš Šefčovič and Chinese commerce minister Wang Wentao in Beijing.
It will be introduced through World Trade Organization safeguard rules rather than an anti-dumping investigation, allowing the EU to act more quickly.
A senior European Commission official, quoted by The Guardian, said: “Dialogue needs to deliver and it has delivered results. But dialogue alone looks unlikely to deal with this structural problem of unsustainable imbalances that we have with China. “That is why the question will be what more do we do in parallel to the dialogue.”
The import agreement comes as the EU develops wider measures intended to support European manufacturing and reduce dependence on individual overseas suppliers.
European car manufacturing organisation ACEA said it welcomed the announcement by the European Commission and China of an interim deal to address critical trade imbalances.
“European automobile manufacturing has thrived for decades through open and fair competition,” it said. “However, the sudden and rapid rise in imports of plug-in hybrid electric vehicles (PHEVs) and hybrid electric vehicles (HEVs) from China is having a destabilising effect on the European car market. In H1 2026, the market share of Chinese brands in Europe was 14% for hybrid electric vehicles (up from 2% in 2024) and 25% for plug-in hybrids (up from 2% in 2024).
“A sharp and sudden destabilisation of the market in Europe, along with price wars that mirror the current market situation in China, would be highly disruptive to the European economy as whole” said Sigrid de Vries, director-general of ACEA. “Today’s announcement can help facilitate the transition to a new era of Chinese presence in the European market in an orderly way and this is in the long-term interests of all parties.”
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