European giants look to 'third engine' markets for new growth

Stellantis calls markets such as Latin America its "third engine" after Europe and the US and last year announced a ‘record’ €5.6 billion (£4.9bn) investment in Brazil and South America, where it leads sales through its Fiat brand.

These regions are still comparatively small in terms of their size, though. In the first half of this year, combined sales in Europe, China and the US accounted for 65% of all global sales, according to figures from European automotive lobby group ACEA. That still leaves 35%, of course, but some markets remain closed. Japan (5.3% of the global market) is famously tricky to crack and its car makers have most of South East Asia (around 5%) sewn up as well. 

Russia remains taboo to all but the Chinese, even if somehow Toyota managed to hit 10th spot there in August according to figures from sales aggregator Bestsellingcarsblog.com.

Instead the target markets are the Middle East and Africa (5.4% of the global car market in the first six months of 2025), along with South America (4.0%), Turkey (1.3%) and India (5.9%).

The advantage of these regions compared with Europe is that car makers aren’t bound by the same expensive regulation in terms of safety, electrification and connectivity, even if they do present their own challenges.

“International markets manage a lot of risk,” Cambolive said. “We speak about tariffs now, but tomorrow it will be exchange rates and inflation and after tomorrow it will be regulation.”

For example, a slump in the value of Turkey’s infamously volatile lira hit Stellantis to the tune of €600 million (£521m) in the first half of the year.

And then there’s the competition from the Chinese, who are busy slicing off a chunk of newer markets for themselves.

“China is clearly leading in terms of costs in the automotive industry, and they're using that cost advantage to dominate markets,” Skoda’s Zellmer said, citing Australia as one example.

In markets where local customers were used to content-light products from established brands, the Chinese have been able to wow with extra gadgets and electrified drivetrains.

“What most of these markets have in common is that there is a lower average transaction price,” said Patrick Hummel, head automotive analyst for the bank UBS. “The Chinese are bringing really good tech into the affordable segment, and that of course is very appealing to consumers.”

This spells danger for incumbents who can’t quickly pivot. “The Chinese are likely to become sizeable and successful players, if they aren't already,” Hummel said.

Examples of their success include Uruguay, where Chinese brands held a 30% share in August, with BYD at number two; and Ecuador, where four Chinese brands reached the top 10 in August, led by Chery.

Meanwhile, in the Japanese heartland of Indonesia, BYD reached sixth in August, according to Bestsellingcarsblog.com. 

Renault’s reaction has been to embrace the threat by partnering with Geely in Brazil to give the Chinese firm access to its plants and sales network in the country, helping its finances in the process. Renault is reportedly also talking to Chery to use its plant in Colombia.

Chinese brands meanwhile are building factories of their own in Thailand, Malaysia, Brazil and elsewhere, led by BYD. 

Meanwhile Skoda is tackling the ever difficult task of breaking into the low-cost Indian market by localising the Volkswagen Group’s China Main Platform into the country, Zellmer said.

China has proven that the grip of the Japanese (and to a lesser extent Ford) on the global one-tonne pick-up truck market is vulnerable, which is prompting others to have a crack.

For example, Hyundai president José Muñoz hinted at the launch of a pick-up as the Korean firm expands in “one of the most important profitable markets for us, the Middle East”.