New passenger car registrations across the European Union increased by 1.8% in 2025, according to data from the European Automobile Manufacturers’ Association. While the growth is modest and volumes remain below pre-pandemic levels, the direction of change is unmistakable: Europe’s automotive market is accelerating its structural transition toward electrified mobility.
For technology providers and financial services players, this is not just a mobility story, it is a systems, data, and business model transformation.
Electrification Is No Longer a Niche — It’s the Market Engine
Growth in 2025 was driven almost entirely by electrified vehicles, reinforcing the shift away from traditional combustion engines and reshaping the operational landscape for OEMs, dealers, leasing companies, and banks.
Battery-electric vehicles (BEVs) reached a 17.4% market share, up from 13.6% in 2024, with nearly 1.9 million units registered. Major markets such as Germany, France, the Netherlands, and Belgium recorded double-digit growth.
Hybrid-electric vehicles (HEVs) remained the dominant choice, accounting for 34.5% of new registrations, with strong uptake across Southern and Western Europe.
Plug-in hybrids (PHEVs) expanded to a 9.4% market share, supported by sharp increases in countries like Spain, Italy, and Germany.
By December, electrified powertrains were clearly outperforming the rest of the market, confirming that consumer adoption is moving faster than many legacy systems were designed to support.
Implications for Leasing, Financing, and Digital Platforms
From a TotalSoft perspective, this shift has immediate consequences for the asset finance ecosystem:
More complex asset lifecycles – Electrified vehicles introduce new variables: battery depreciation, usage-based residual values, software updates, and second-life scenarios.
Higher demand for flexible financing models – Subscription, usage-based leasing, and blended products are gaining relevance alongside traditional leasing.
Increased data dependency – Accurate pricing, risk management, and portfolio optimization now rely on real-time data, automation, and advanced analytics.
This evolution reinforces the need for end-to-end digital platforms that can manage contracts, assets, compliance, and customer journeys seamlessly—across multiple vehicle types and regulatory environments.
Internal Combustion Declines Accelerate the Shift
At the same time, internal combustion engine vehicles continued their rapid decline:
Petrol registrations fell 18.7%, reducing market share to 26.6%
Diesel dropped 24.2%, falling below 9% market share
Combined, petrol and diesel accounted for just 35.5% of registrations in 2025, down from over 45% a year earlier. This contraction is forcing financial institutions and fleet operators to rebalance portfolios faster than anticipated.
A Market in Structural Transition
With electrified vehicles now representing more than 60% of new EU registrations, the automotive market has crossed a structural threshold. Growth is no longer about volume alone, but about adaptability, digital maturity, and ecosystem integration.
For TotalSoft, this reinforces a clear strategic direction: supporting leasing companies, banks, and mobility providers with future-ready, configurable, and data-driven solutions that enable them to scale confidently in a rapidly changing market.
The transition to cleaner mobility is underway. The winners will be those who modernize not just their fleets—but their systems, processes, and decision-making models along with them.
