A more resilient Western European market remains on track to surpass 12 million units for the first time since pre-COVID 2019 this year. However, look below the surface and weak pricing, driven by new market entrants and potentially causing contagion across the entire market, is driving a large proportion of that growth. A declining Chinese market in 2026 is pushing manufacturers exposed there to focus on Europe and the Global South to maintain volumes, with Chinese OEMs increasingly front-loading the market ahead of the likely implementation of EU quotas on hybrids. The proposed deal would start at 350,000 units per year, rising by 6% each year over four years. Meanwhile, a market increasingly driven by electric-vehicle demand, as a consequence of pump-price inflation from the Iran crisis, is dramatically reshaping the region's dynamics. Manufacturers such as the Volkswagen Group are now witnessing BEV incoming orders account for 40% of the current order book. While this helps meet regulatory CO2 fleet-emissions compliance and ZEV mandate targets, BEVs remain margin-dilutive for many, with Volkswagen Group confirming their contribution margins remain at just 70-80% of ICE margins, which continues to weigh on already strained underlying profit margins.