Europe's new car registrations rose 4.9% year-over-year to 1.09 million units in October, marking the fourth straight month of growth, according to data released by the European Automobile Manufacturers' Association (ACEA). The increase was driven by automakers' expanded offerings of affordable electric vehicle (EV) models across the region.

Among major markets, Spain and Germany saw the most significant sales growth, while the UK and Italy stagnated. The introduction of budget-friendly urban EVs like Stellantis NV's (STLA.US) Citroën ë-C3 has attracted consumers with more diverse options. However, automakers continue to grapple with slower-than-expected EV adoption rates.

Volkswagen (VWAGY.US) and Stellantis have scaled back production at some plants due to weak demand and repeated profit warnings. Porsche (POAHY.US), a Volkswagen subsidiary, has also adjusted its EV strategy downward.

By powertrain type, European EV sales showed strong momentum in October. Plug-in hybrid registrations surged 40%, while pure EV registrations rose nearly one-third. Among automakers, Renault (RNLSY.US) posted an 11% sales increase, with Volkswagen and BMW also achieving steady growth.

Chinese automaker BYD (01211) stood out with a more than 200% sales jump, far outpacing Tesla (TSLA.US), which saw registrations plummet 48%.

Despite automakers' intensified EV R&D efforts, some are urging policymakers for greater flexibility in emissions regulations. Industry representatives will meet with EU officials next month to discuss potential adjustments to the 2035 combustion-engine ban. While German Chancellor Merz supports relaxing transition rules, Spain insists on maintaining the original plan.

Meanwhile, Chinese automakers like BYD are expanding their European presence with more plug-in models, intensifying competition. Analysts expect the European auto market to gradually recover from 2024 onward, supported by new EV subsidies, cost controls, and strategic realignments, with further improvements anticipated in 2026-2027.