- Most major markets in Europe have seen new hybrid sales growth slow
- Smaller segments saw surging deliveries, mainly caused by increased offerings
- Hybrids remain essential for fleets and OEMs, despite country-specific variations
New hybrid sales, including full (HEVs) and mild (MHEVs) versions, increased by 12.3% year over year during the first half of 2026 across Western and Central Europe.
According to EV Volumes, part of JD Power, 2,713,638 hybrid units were delivered in the region. This marked a marginal slowdown in growth. A 15.6% year-over-year improvement was recorded during the same period of last year.
MHEVs accounted for most of the new hybrid sales total, taking a 63.4% share. The technology’s 1,719,231 delivery total was up 11.3% year over year.
HEVs represented 36.6% of new hybrid sales in the first half. Yet the technology recorded greater growth than MHEVs, up 14.1% to 994,407 sales. While January saw a marginal 1.3% rise, deliveries ended the first half strongly, with a 27.2% improvement in June.
“The current double-digit growth of both MHEVs and HEVs will encourage OEMs to maintain and expand their hybrid portfolios,” noted Hagen Brosius, senior business development manager for OEM solutions at JD Power Europe & Australia.
“It provides additional volume and revenue while helping manufacturers reduce fleet emissions and serve customers who are not yet ready to switch to a battery-electric vehicle (BEV).
“At the same time, OEMs need to manage growing product complexity and development costs. They also need to control potential competition between hybrid and BEV models. The key challenge will be to capture this near-term demand without slowing down the longer-term transition to all-electric vehicles,” he outlined.
Surging Hybrid A-Segment in Europe
Smaller passenger car segments have seen significant growth in hybrid sales. A-segment cars recorded an 87.0% year-over-year increase in deliveries in the first half to 145,257 units.
“OEMs should pay close attention to the growth of A-segment cars. However, its strategic importance depends on the OEM. For volume manufacturers, it represents an important entry point to individual mobility,” commented Brosius.
“This is particularly the case for first-time buyers, younger customers and households seeking an affordable second car. Premium manufacturers, by contrast, may find the segment less attractive because of its lower margins. A-segment cars may also have a limited fit with their brand positioning.
“Rising living costs are increasing demand for vehicles with a lower purchase price and manageable running costs. Although margins are typically lower, A-segment cars can generate scale, attract new customers and build long-term brand loyalty,” he highlighted.
Increasing Model Availability
B-segment cars managed a 23.3% improvement, while B-segment SUV sales surged by 24.2% compared to the first half of 2025.
“This growth is driven by both increased model availability and stronger consumer demand. This significantly wider model selection has made hybrid technology accessible across more brands, price points and customer groups,” explained Brosius.
“Alongside this, rising living costs are making consumers more price- and fuel-efficiency-conscious. B-segment cars offer lower purchase and operating costs. Meanwhile, B-segment SUVs combine relative affordability with the design, higher seating position and practicality that many consumers prefer,” he said.
However, C-SUVs recorded the highest level of hybrid sales. The segment accounted for 34.1% of the powertrain’s overall volume between January and June 2026.
Importance for OEMs in Europe
Overall, hybrid models remain very important for OEMs in Europe. They act both as a major volume driver and as a transition technology towards BEVs.
“However, Europe is not one homogeneous market. The relevance of MHEVs, HEVs, plug-in hybrids (PHEVs) and BEVs differs significantly by country. We see this clearly when supporting new-vehicle studies across Europe. Even the reference vehicles selected for powertrain assessments vary strongly between markets,” revealed Brosius.
“Therefore, OEMs need a country-specific approach to their powertrain portfolio, pricing and positioning,” he suggested.
OEMs are invested in hybrids, while clearly increasing their focus on BEVs. The former technology is also often among the more profitable powertrains for OEMs in Europe at the moment. Yet this is not always the case. Profitability can vary depending on the OEM, model and country.
“MHEVs and HEVs can benefit from strong demand, higher transaction prices and the use of mature combustion-engine platforms. This can provide attractive margins compared with BEVs, which still face high battery costs, pricing pressure and substantial investment requirements,” outlined Brosius.
“Overall, hybrids currently offer many OEMs a very attractive balance of volume, pricing and manageable production costs,” he summarized.
Hybrids Remain Low-Risk
In the short term, geopolitical uncertainty and volatile energy prices are encouraging OEMs to maintain flexible multi-powertrain strategies. Hybrids remain a lower-risk option for customers concerned about charging infrastructure, range, or the higher purchase price of BEVs.
This is also the case in the leasing market. However, this can again differ significantly between countries. “For example, there is a higher demand for HEVs in Italy’s used-car market, which leads to higher residual values (RVs). Meanwhile, PHEVs typically face a significantly weaker value outlook,” explained Brosius.
“In leasing-intensive markets, such differences have a direct effect on monthly rates. More competitive rates can increase customer demand and generate additional sales for manufacturers without requiring the same level of discounts or financial support,” he noted.
European Fleet Focus
Hybrids are also valuable for fleets in Europe. Favorable taxation compared to pure internal-combustion engine (ICE) models have encouraged demand. Hybrids can also help fleets step away from ICE cars even when they need greater ranges or operate in markets with slower BEV adoption.
“Whether hybrids are the preferred powertrain option for fleets heavily depends upon taxation and charging infrastructure availability. Most EU countries support MHEVs and HEVs with lower taxes,” highlighted Ronny Van Gerwen, account director fleet and finance at JD Power Europe & Australia.
“In Belgium, for example, HEVs have certainly become more attractive for fleets from a fiscal or tax perspective,” he said. “This caused an increase in HEV deliveries and a decline in MHEV sales lately. In combination with more beneficial taxation, people in Belgium and the Netherlands are also looking more into hybrids because of the rising fuel prices.”
Hybrid Market Leaders in Italy
Italy recorded more new hybrid sales in the first half of 2026 than any other country in Europe. Its 470,397-unit total was up 22.5% year-over-year.
“Hybrids accounted for 50.3% of new-car sales in Italy during the first half of 2026. This was an increase compared to their 42.7% share across 2025, confirming the appeal of these engines to Italian customers,” stated Edoardo Buffo, senior residual value and data analyst at JD Power Europe & Australia.
“This increase is due to OEM offerings, which are shifting from pure petrol models to MHEV and HEVs. New brands are also entering the Italian market with a focus on PHEV, extended-range electric vehicle (EREV) and HEV engines rather than BEVs,” he confirmed.
HEVs have seen a particularly strong first half of the year, with sales increasing by 28% to 137,750 units. This followed a 0.7% delivery decline in 2025.
“Some relevant and popular models have been updated and are now also offered with a HEV engine among their powertrains. Others have just entered the market and are selling well. This has all contributed to the strong bounce-back in HEV sales growth,” revealed Buffo.
Italy’s Small Segment Shift
Smaller segments saw significant hybrid sales growth in Italy between January and June. A-segment hybrid cars saw volumes soar by 43.4% year-over-year, representing 19.4% of the technology’s overall total in the country. B-segment hybrid cars recorded a 36.7% improvement and a 14.7% share.
“There is no specific reason why sales have increased so strongly for small hybrid cars. Instead, it marks a shift from OEMs towards these fuel types to replace pure petrol engines. So, this ’artificial’ growth appears,” confirmed Buffo.
“The A and B-car segments are very important in Italy. They accounted for 26.4% of new car sales between January and June, according to UNRAE. This means shifts in offers from OEMs are reflected quickly in the powertrain distribution,” he highlighted.
Preferred Fleet Choice in Italy
Hybrids represent the preferred powertrain choice for fleets in Italy. According to UNRAE, HEVs held a 35.4% share of long-term rental registrations between January and June 2026. This was a 5.9 percentage point (pp) rise year over year, and the highest share of any powertrain.
However, BEVs and PHEVs have gained ground, with 12.8% and 5.7% shares, respectively. This may be in part due to preferential tax treatment.
“Until 2025, HEVs benefited from company car taxation schemes based on CO₂ emissions. Since then, tax incentives have been limited to specific powertrains, namely BEVs and PHEVs. As a result, HEVs have lost much of their fiscal attractiveness, as they no longer enjoy potential tax advantages over MHEVs,” noted Buffo.
Looking at various used-car performance metrics such as %RVs, HEVs are stronger than electric vehicles (EVs). This means fleets may have more confidence in HEVs when they return to the market after their first lifecycle.
“During July, two-to-four-year-old HEVs sold in 51.5 days on average, behind only compressed natural gas and liquefied petroleum gas (LPG) fuel types. Three-year-old HEVs at 60,000 km also recorded an average value retention rate (%RV) of 44.7%. This was only outperformed by diesel,” outlined Buffo.
“Looking at all used-car age groups, HEVs have the second-lowest number of average price changes, behind LPGs, Residual Value Intelligence shows. This matches the low stock day figures. It is also the youngest powertrain on average in Italy’s used-car market,” he said.
Slowing Hybrid Growth in UK
New hybrid sales growth has slowed in the UK compared to 2025. Deliveries were up 8.5% year over year between January and June, with 437,099 units. This led to a 38.4% share of the UK new-car market, up 0.9pp from hybrids’ full-year share in 2025.
HEVs have been the main driver of growth, with a 12.8% year-over-year increase compared to MHEVs’ 6.0% improvement. However, the former only accounted for 14.4% of the new-car market in the first half of 2026. MHEVs made up a larger 24.0% slice. This difference in sales improvement may in part be caused by shifting consumer trends.
“All HEVs are automatic, whereas many MHEVs are still offered with a manual gearbox. As UK consumers have become increasingly accustomed to automatic transmissions, this may be contributing to stronger HEV demand,” explained Jayson Whittington, regional head of valuations for the UK, Nordics and Australia at JD Power Europe & Australia.
In particular, D-segment hybrid SUVs are seeing sales rise sharply, with a 44.3% increase in the first six months of the year. “HEVs currently rank third in terms of market share in the UK’s new car market. They sit behind petrol and BEVs, yet are narrowly ahead of PHEVs,” confirmed Whittington.
“The HEV market share so far in 2026 is broadly stable, but sales are rising largely because there is now much greater availability of HEV models. This gives consumers and fleets more choice than in previous years,” he stated.
Easing the Electrification Transition
Hybrid models remain essential for OEMs in the UK. They provide a familiar transition from ICE models, requiring no charging infrastructure or changes to refueling behavior.
“Hybrids help manufacturers achieve fleet CO₂ targets and can be produced on the same manufacturing lines as conventional ICE vehicles. In turn, this eases the transition to electrification,” said Whittington.
“Carmakers in the UK remain heavily invested in HEVs. However, their long-term focus has shifted towards BEVs, as manufacturers work to meet increasingly demanding ZEV mandate targets,” he outlined. Meanwhile, for many fleets in the UK, hybrids have become a practical replacement for diesel vehicles.
“HEVs typically rank above conventional ICE vehicles, particularly as fleets continue to prioritize fuel efficiency and lower CO₂ emissions. HEVs benefit from lower benefit-in-kind (BIK) taxation rates for company car users than ICE models,” said Whittington.
“However, BEVs remain the preferred option because of favorable benefit-in-kind (BIK) taxation. This can significantly reduce costs for both employers and drivers. PHEVs are often the second choice, offering lower emissions and tax advantages while providing greater flexibility than a BEV,” he noted.
High Hybrid Residual Values in the UK
In the UK used-car market, three-year-old HEVs at 60,000 km recorded a higher average %RV than BEVs or PHEVs between January 2021 and August 2026. Until September 2025, they also held the highest %RV of all powertrains at the same age and mileage, according to Residual Value Intelligence.
“The used hybrid market is unlikely to become oversupplied in the near term. That said, continued hybrid registration growth will naturally increase used-car supply,” projected Whittington.
“As hybrids become more mainstream, they may effectively fit into the role that ICE models play in today’s market. In this scenario, hybrids could begin to inherit ICE-like RV dynamics rather than command the premiums seen today.
“This could put some downward pressure on average hybrid %RVs as the mix broadens. However, the strongest-performing hybrid brands with established reputations for reliability and efficiency are unlikely to see a significant deterioration in RVs. They should continue to outperform the wider market,” he forecast.
Germany’s Expanding MHEV Market
Germany saw high MHEV sales between January and June 2026, with 347,164 units delivered. Combined with 80,632 HEV deliveries, the hybrids represented 28.8% of all new-car volumes in Germany. The powertrain group saw sales increase by 7.0% year over year, a slight slowdown from 2025’s 10% growth.
Within this total, B-segment hybrid SUV sales surged 66.7% year over year. Additionally, B-segment hybrid cars recorded a 25.1% improvement.
“As there is still uncertainty regarding CO2-emission targets, OEMs in Germany still need hybrids as a bridging technology,” commented Ina Gronemeyer, cluster head of valuations for Germany, Austria and Switzerland at JD Power Europe & Australia.
“This will continue to be the case until it is clear which emission targets they must reach, by when, and how,” she projected.
Hybrids Inferior for Fleets in Germany?
Hybrids face higher company car taxation than BEVs or PHEVs, which need to be paid from an employee’s taxable salary. This generally makes both EV technologies a preferred option for fleets over hybrids in Germany.
“For a PHEV, a company car user must pay half the amount they would for a HEV and MHEV. For a BEV, they must only pay a quarter of what they would with these two powertrains. Yet this is also dependent on the car’s new price, including options,” outlined Gronemeyer.
“Furthermore, PHEVs, and especially BEVs, reduce CO2 emissions even more than hybrid cars. That is an important measurement for many companies nowadays as they must fulfil sustainability targets. Besides this, BEV fleets have lower operating costs, and especially now, lower fuel costs,” she highlighted.
According to Residual Value Intelligence, ICE models and PHEVs recently saw a much steeper drop than HEVs in the used-car price index. This could make HEVs more desirable for fleets, reducing the risk of reduced margins when de-fleeting. It could also mean they avoid any sporadic demand caused by inconsistent powertrain pricing trends.
France’s Stagnating HEV Market
Hybrids account for a significant portion of France’s new-car market. In the first half of 2026, the powertrain group captured 45.4% of total volumes, recording 388,841 deliveries. This was an increase of 3.5% year over year.
Yet, this result was a long way off a 31.1% rise in new hybrid sales during the same period in 2025. MHEVs saw a 43.2% year-over-year surge between January and June 2025, but in the same period of 2026, only 9.4% growth was recorded.
Meanwhile, the country saw a 3.1% decline in new HEV sales in the first half of 2026, reaching 171,957 units. This was down from a 19.8% rise last year.
“Hybrid sales growth has slowed since 2025, following a change in BIK regulation at the start of last year. As fleets account for a large portion of new-car acquisition, this has heavily impacted the market,” outlined Ludovic Percier, senior residual value analyst at JD Power Europe & Australia.
A-segment cars bucked this trend of marginal hybrid growth with a 901.9% year-over-year improvement. Yet the segment only made up 3.3% of the overall hybrid market.
“Small hybrid car sales have surged because most of the models are MHEVs. These cars have gradually replaced their respective previous generations, which mostly used pure ICE powertrains,” revealed Percier.
This represents a wider trend of models offering hybrid technology in their new generations. Overall, there is a growing selection of models in France with hybrid technology. Despite this, hybrids are not necessarily the top priority for OEMs at present in the country.
“OEMs in France are mainly focused on BEVs, as the technology advances, delivering better range and shorter charging time. However, carmakers in France are still interested in hybrids,” confirmed Percier.
Fiscal Advantages in France
This is also the case for fleets, due to fiscal advantages. However, if BEVs are too constraining for a company, then HEVs or PHEVs are the backup solution over ICE models.
“This contrasts with a couple of years ago, when PHEVs were one of the first choices for fleets as it was still fiscally favorable,” noted Percier.
“In terms of used-car %RVs, HEVs are currently at the same level as pure petrol models. In the past, HEV %RVs were slightly higher. This was because there were fewer HEV models. Since then, more mainstream brands have joined the HEV market with slightly lower %RVs, lowering the powertrain’s average,” he commented.
Spain Maintains Sales Speed
Spain saw strong year-over-year hybrid sales growth between January and June 2026. Volumes were up by 20.9% to 307,144 units, continuing from the sharp increase seen in 2025. The powertrain group made up 47.4% of overall new-car sales in the first half of the year, making it a key element of Spain’s automotive industry.
“Spain is a particularly hybrid-driven market, with hybrid technology the preferred choice in both new and used cars,” said Ana Azofra, regional head of valuations for Southwest Europe at JD Power Europe & Australia.
“For the latter, this is represented by high demand, while pure ICE models still account for a large share of used car volumes,” she noted.
Positivity for Full Hybrids in Spain
HEVs had a particularly positive first six months in Spain, with volumes soaring by 36.2% year over year. This translated to 138,795 deliveries and a 21.4% share of Spain’s new-car market. This result may have been influenced by a few key factors.
“HEVs, and to a lesser extent MHEVs, benefit from better registration taxes, road taxes, parking taxes in most cities, access to low-emissions areas and other discounts,” outlined Azofra.
However, MHEVs recorded a slowdown in growth between January and June 2026. Its 10.6% rise was some distance off its 29.6% improvement from the same period last year.
“MHEVs are seen more like an ICE car in Spain, with some benefits. There are discussions about maintaining benefits for MHEVs in the future. On the other hand, the HEV offer is growing. Prices are also more competitive because of the introduction of models from Chinese manufacturers,” explained Azofra.
B-segment hybrids recorded an especially strong increase in the first six months of 2026. Hybrids in the B-SUB segment posted a 47.8% surge in volumes, while B-segment hybrid cars saw deliveries grow by 49.1%.
“B-segment hybrid sales have increased as more OEMs are offering the technology in smaller segments. The OEM offer has also grown for D-segment hybrid SUVs,” confirmed Azofra.
Are Hybrids Essential?
Manufacturers in Spain continue to support hybrid demand by maintaining a strong offering for the technology.
“Given the relatively slow adoption of BEVs in Spain, hybrids have proved to be a very effective transition technology. They remain an important part of carmaker strategies in the country,” said Azofra.
“More recently, we have also seen Chinese brands recognize the importance of hybrids in Spain. These carmakers are increasingly incorporating the powertrain into their product portfolios. Chinese marques are particularly agile in adapting technologies and bringing them to market,” she highlighted.
Hybrids are also essential for fleets in Spain. Many corporate car policies include the technology in their sustainability targets.
“This further supports demand and reinforces their relevance in the market. Currently, fleets’ focus is on hybrids because of general demand and acceptance. The technology is very attractive for them, as it has clear fiscal advantages,” pointed out Azofra.
“In terms of the used-car market, HEVs typically spend significantly fewer days in stock than any other powertrain in Spain. Furthermore, the fastest-selling two-to-four-year-old used models in Spain are usually HEVs,” Azofra concluded.
Author: Tom Hooker, content specialist at JD Power Europe & Australia. Proofing: Tom Geggus, media lead at JD Power Europe & Australia.