This box draws on new data from the ECB Consumer Expectations Survey (CES) to examine households’ demand for cars in the euro area. The car sector plays a crucial role in the euro area economy, accounting for around 10% of manufacturing value added and close to 2% of real GDP. However, in recent years the sector has faced significant headwinds, with new passenger car registrations and production volumes in the second quarter of 2025 still around 20% and 30% below their early-2018 levels respectively (Chart A).[1] The composition of registrations points to a notable shift in the types of car being purchased and helps explain the decline in overall registrations, with a reduction in internal combustion engine (ICE) car sales being only partly offset by an increase in sales of hybrid and fully electric vehicles. This box uses CES data collected in July 2025 to shed more light on the main factors shaping households’ car expenditure decisions in the euro area, which are an important component of overall car demand.[2]
Chart A
Car production volumes and registrations
(left-hand scale: index: Q1 2018 = 100; right-hand scale: percentages of total registrations)
Sources: European Automobile Manufacturers’ Association, Eurostat and ECB calculations.
Note: The latest observations are for the second quarter of 2025.
The new CES data provide timely, household-level insights into the composition of car purchases, showing that these were mainly concentrated in second-hand ICE cars. Over the period 2021-24, the annual share of CES respondents reporting a car purchase ranged between 6% and 7%. In July 2025 – when the one-off set of questions about car purchases was fielded in the CES – 47% of respondents who had bought a car in the previous 30 days reported buying a new car and 53% reported buying a second-hand car (Chart B, panel a). ICE vehicles accounted for around 43% of new car purchases, while hybrids and fully electric cars represented 31% and 25% respectively. By contrast, in the second-hand market, the vast majority of purchases were ICE cars (70%), with hybrids and fully electric cars each making up only around 15%.
Chart B
Type of car purchased and reason
a) Distribution of car types purchased
(percentages of respondents who bought a car in the previous 30 days)
b) Reasons for buying a second-hand car rather than a new car
(percentages of respondents who bought a second-hand car in the previous 30 days)
Sources: ECB (CES) and ECB calculations.
Notes: Based on the July 2025 CES wave. Panel a) shows the distribution of the types of car purchased (488 respondents). The percentages refer to the share of each car type in total purchases across both new and second-hand cars. Together, the “new” and “second-hand” bars total 100%, representing all car purchases reported in the July 2025 CES wave. Panel b) shows responses to the question “What was the main reason for buying a second-hand car instead of a new car?” broken down by income (highest and lowest income quintile; 258 respondents). Responses not included in the chart fall under “other reasons”.
Across all respondents, concerns about the value of a new car depreciating quickly was the main reason for buying a second-hand car rather than a new one, while for low-income households, limited access to affordable financing played the largest role. In July 2025, of the CES respondents who had bought a second-hand car in the past 30 days, 22% cited concerns about the value of a new car depreciating as their main reason. The next most reported reason was limited access to affordable financing options (14%), followed by waiting for electric vehicles to become cheaper (13%), economic and financial uncertainty (12%) and worries about new environmental regulations (8%) (Chart B, panel b). These factors varied considerably across income groups. For low-income households, the main obstacle to purchasing a new car was limited access to affordable financing options, with 27% of respondents in this group citing this as the main reason for choosing a second-hand car. Financing constraints were much less relevant for high-income households, with only 4% mentioning this as the main reason.
Most CES respondents had no plans to buy a car within the next year, with economic and financial uncertainty and a preference for alternative modes of transportation playing a role in their decision, particularly for low-income households (Chart C). In July 2025, 11% of CES respondents reported plans to purchase a car within the next year, while 89% had no such plans.[3] Of those not planning to buy a car, 63% indicated that their current car met their needs, 10% cited economic and financial uncertainty and 10% reported a preference for alternative modes of transportation. Limited access to affordable financing options and worries about future environmental regulations were less relevant, each accounting for around 4% of responses. The relative importance of these factors also differed across income groups. Economic and financial uncertainty and a preference for alternative modes of transportation were more important for low-income households (18% and 16% of responses respectively) than for high-income households (5% and 6% of responses respectively). By contrast, high-income households (78%) were much more likely to say that their current car met their needs than low-income households (43%).[4]
Chart C
Reasons for not planning a car purchase
(percentages of respondents not planning on buying a car)
Sources: ECB (CES) and ECB calculations.
Notes: Based on the July 2025 CES wave. The chart presents responses to the question “What is the main reason you are not planning to buy a car in the next 12 months?”, broken down by income (highest and lowest income quintile). The sample size is 18,212 respondents. Responses not included in the chart fall under “other reasons”.
Among respondents planning to buy a car, there was higher demand for ICE cars and hybrids than for fully electric vehicles. In the July 2025 CES wave 42% of respondents who were planning to buy a car within the next year intended to purchase an ICE car and 41% intended to buy a hybrid (Chart D, panel a). Although intentions do not necessarily translate into actual purchases, these shares differ significantly from those for actual purchases in the same month, with 58% of car buyers opting for ICE vehicles and only 23% choosing hybrids (Chart B, panel a). 16% of respondents planned to buy a fully electric vehicle, compared with 19% of reported actual purchases in July 2025.[5] Regarding the origin of cars, 81% of respondents planning to buy a car within the next year wanted their vehicle to be from an EU country, whereas 19% preferred cars from countries outside the EU (Chart D, panel b).
Chart D
Planned car type and origin preferences
a) Preferred car type
(percentages of respondents planning to buy a car within the next year)
b) Preferred origin
(percentages of respondents planning to buy a car within the next year)
Sources: ECB (CES) and ECB calculations.
Notes: Based on the July 2025 CES wave. Panel a) presents responses to the question “What type of vehicle are you planning to buy in the next 12 months?” and panel b) shows responses to the question “Where would you most prefer the origin of your next car to be?” The sample size for both panels is 2,293 respondents.
Looking ahead, the recovery of euro area car demand is likely to remain sluggish amid persistent challenges. The July 2025 CES data on car demand in the euro area indicate that the elevated economic and financial uncertainty is likely to weigh on future car purchasing decisions, particularly among low-income households. This suggests that any rebound in car demand may be slow. At the same time, households’ limited interest in fully electric vehicles indicates that the transition to electrification is likely to continue to be gradual.
References
De Santis, R.A. (2024), “Supply chain disruption and energy supply shocks: Impact on euro area output and prices”, International Journal of Central Banking, Vol. 20, No 2, pp. 193-236.
De Santis, R.A., Di Nino, V., Furbach, N., Neumann, U. and Neves, P. (2024), “Will the euro area car sector recover?”, Economic Bulletin, Issue 4, ECB.
De Santis, R.A., Di Sano, M., Gunnella, V. and Neves, P. (2022), “Motor vehicle sector: explaining the drop in output and the rise in prices”, Economic Bulletin, Issue 7, ECB.
See De Santis, R.A. et al. (2022), De Santis, R.A. (2024) and De Santis, R.A. et al. (2024).
While households account for a smaller share of total new car registrations than corporate or rental fleets, they remain an important market segment. According to data from the European Automobile Manufacturers’ Association, private registrations make up around 40% of new car registrations in the European Union.
Planned car purchases can exceed eventual purchases. For example, in January 2024 nearly 9% of respondents said they intended to buy a car within the next year, whereas only around 7% of respondents actually did so in 2024.
This difference may partly reflect differences in the age and number of cars owned between high-income and low-income households. However, the CES does not provide information on these factors.
Note that these figures include both new and second-hand cars, whereas Chart A refers to new car registrations only.