The UK and Italy led the European new car market’s recovery in 2023 as the world emerged from the Covid pandemic and the subsequent supply chain disruption, while the US and Japan also bounced back significantly, Tesla set a new sales record and China’s BYD emerged as a global force.

After three years of doom and gloom, a degree of normality returned to the global market, with every region finally recording sales increases again and firms like Toyota, Tesla, Mercedes-Benz and JLR rediscovering their mojos.

Perhaps the most remarkable story is that of an EV becoming a global best-seller, the Tesla Model Y removing the Toyota Corolla from the throne after many years. As a sign of the change to come in the run-up to 2035 as electrification takes hold in global markets, it will make 2023 one of the most memorable years in the automotive industry’s history.

Despite the Corolla stumbling, Toyota actually reinforced its position as the global number-one car maker, significantly ahead of its nearest rival, the Volkswagen Group. It was also the biggest brand in the number-two market, the US. The Japanese juggernaut may have been a vocal critic of lawmakers' focus on battery-electrification, but so far that hasn’t significantly damaged its standing.

Of course, the pivot to EVs is gaining pace, but different markets are in different stages of adoption. China continues to lead the way, with EVs accounting for more than 30% of its sales, while Europe is moving from early adopter to mass market, at nearly 15% electric, with signs that new corporate-average emissions rules might speed up adoption. Meanwhile, the US, despite being the home of Tesla, lags behind the other main markets, with just 8%.

The year ahead will be fascinating as some markets go hardcore on electrification. The UK’s legally binding zero-emissions vehicle mandate, for example, should boost the EV sales mix by around 5% to 22% by the end of 2024, which equates to around an extra 110,000 EVs.

Global recovery from Covid chaos

Global new car sales made a very welcome recovery in 2023 after three years of disruption by Covid, parts shortages and rising energy prices, with the UK, Italy, Japan and the US a l l recording significant rises.

The UK and Italy led the way, with 18% and 19% increases, and overall around seven million more cars and light vans were sold in the top 10 markets in 2023 than in 2022. The US alone bought 1.76 million more than in the year before.

Italy replaced South Korea in the top 10; the UK jumped ahead of Brazil to sixth; Germany returned to its historic running rate of three million-plus; and Japan nudged ahead of India by some 62,000 cars to regain third.

Indicating the strength of the recovery, each top-10 market recorded a sales increase, whereas last year just three grew.

China is, of course, firmly cemented as the world’s biggest market, and it recorded a solid 6% sales rise. However, the market faces headwinds in 2024 with the economy faltering and uncertainty following the end of Covid restrictions.

JATO’S view: “Western markets (including Japan) recorded big increases following years of bad results. Still, many of them are far away from pre-Covid levels.”

Electric cars power growth in all major European markets

Electrification has give the European market the boost it needed to recover from three years of weakness, with EVs moving ahead of diesels to become the third-most-popular type of car.

By the end of 2023, EVs contributed 15% of the market, compared with 14% for diesels. Petrols (35%) and hybrids (26%) still led the market overall, though. Much of this change can be put down to government intervention.

Just as with the global top 10, the European top 10 markets all experienced growth in 2023 – a marked improvement on 2022, when not a single one grew. As a result, the top 10 bought a combined 12.5 million cars – an increase of 1.5 million.

Winners included Belgium, which moved ahead of Poland, thanks to a spectacular 29% sales increase.

JATO’s view: “There’s certainly a recovery that has brought with it a new market reality. Many car makers are now making more money yet selling fewer vehicles compared with 2019.”

Global big five car makers all up; Toyota still leader 

There was no change in the order of the world’s biggest automotive companies in 2023, with Toyota solidly positioned at the top and the Volkswagen Group the pretender to the throne.

Toyota has faced criticism for its tardiness introducing EVs, but so far that strategy hasn’t harmed its sales, despite the Corolla losing its global top spot to the Tesla Model Y. Indeed, Toyota marginally increased its lead over its German rival, an EV pioneer, by some 40,000.

Significantly, the ‘ big five’ all increased sales in 2023 – further evidence of the global recovery. And for companies like the Volkswagen Group and Honda, that was a dramatic turnaround from 2022, when they lost 10% and 15% of their sales respectively.

Competition inside the top five is intensifying, too. The Volkswagen Group extended its lead over Honda, while Ford had a good year and closed the gap to its Japanese rival, at the same time extending its lead over Korea’s Hyundai.

JATO’s view: “Toyota is at the top and will stay at the top, because it has a strong presence everywhere in the world. BYD is the shadow challenger: it might break into the top five in 2025.”

Tesla byword for EV in Europe; VW Group and MG also thrive

Tesla’s compact SUV, the Model Y, was in so much demand in Europe last year that it ended 2023 as the best-selling car, not just the best-selling elect r ic car.

Tesla has long been the go-to for an EV in Europe and, as in other parts of the world, it was further helped by price cuts.

Preliminary data suggests it outsold the number-two combustion car in Europe, the Dacia Sandero, by 19,000.

The MG 4 was the other standout EV success. The Chinese hatchback’s strong combination of attributes, built around very keen pricing, took it to number four in the European charts in its first full year, embarrassing the German-built Volkswagen ID 3 and French-built Renault Mégane E-Tech Electric.

The Volkswagen Group can take comfort from the Volkswagen ID 4 and Skoda Enyaq iV feature in the electric top five. If seen in terms of manufacturing strategies, the MEB platform siblings contributed 150,000 – twice as many as the 4.

Other winners were the Volvo XC40 Recharge, BMW i4, Audi Q4 E-t ron and BMW i X1.

JATO’s view: “MG wins because its cars are very competitive and don’t compete against Tesla or premium brands but against volume brands that are still struggling to come up with affordable EVs.”

Tesla and Chinese makers dominate global EV market

Tesla strengthened its grip on the global EV market, with the Model Y and Model 3 extending their lead over their Chinese and European rivals to consolidate their positions as the two best-sellers.

The American firm benefited from price cuts and competitive sales offers, plus the growing acceptance of EVs globally.

The Model Y posted an excellent 65% rise to push it past a million annual sales for the first time.

Competition is growing, though. China’s BYD now has four models in the global EV top 10 and a complete range of at least nine, especially at lower price points.

“This is why BYD is growing faster than Tesla: it has more to offer in both the developed and developing markets,” says Felipe Munoz, senior analyst at Jato Dynamics.

Reports of an entry-level Tesla ‘Model 2’ in development for a 2025 introduction suggest a shift prompted by Chinese competition.

Both the Volkswagen Group and BMW are making big advances in EVs. BMW is the leading premium brand in this part of the market, but its fellow German firm is having a tough time against Tesla and the Chinese in the volume market.

Volkswagen’s ID 4 is doing well, with sales growing by 23,000 over 2022, but it ’s still at only a fraction of the Model Y’s volume, while the cheaper ID 3 continues to struggle.

JATO’s view: “Tesla is top of buyer lists for consumers looking for an EV. But the market is also growing for affordable electric cars, and that’s why BYD is growing faster.”

Top two Toyotas post sales rises – but it’s not enough to fend off Tesla crossover onslaught

The all-conquering Tesla Model Y reached a dramatic milestone in 2023, it seems, by selling at least 1.2 million units to take the title of the world’s best-selling car.

Numbers are still coming in to Jato’s researchers, so the positions might still change, but there’s sufficient data for a preliminary announcement that the electric crossover has jumped ahead of both the Toyota Corolla and the Toyota RAV4, which last year finished first and second.

The Model Y enjoyed a huge increase of around 500,000 sales in 2023, boosted by price cuts that made it about 20% cheaper than rivals in the US and the EU.

Two-thirds of Tesla’s output and sales are contributed by the compact SUV. Toyota’s best-selling duo actually grew – the Corolla added an impressive 88,000 – but nowhere near enough to offset gains by the American EV powerhouse.

JATO’s view: “We haven’t yet analysed all models in total detail, but the preliminary data indicates the Model Y is in an unassailable position. The increase in global sales of the Model Y is unprecedented, and what Tesla has achieved in such a short space of time is simply remarkable.”

New-generation Range Rover pair and Defender fuel global recovery for JLR

There was no doubt much relief in the West Midlands as JLR escaped the stranglehold of parts and chip shortages to take advantage of strong demand in the US, the UK and China and post a terrific 23% sales rise in 2023 to hit nearly 390,000 for the year.

Land Rover was the standout performer, with three models – the Range Rover, Defender and Discovery – each recording rises of more than 50%. The Range Rover Sport wasn’t far behind, with a 49% increase.

The new generation of Range Rover is selling well everywhere, the company flagship recording increases of 100% in China and 36% in the US.

It was almost matched by the Defender, which was up 73% in the US, 46% in China and 52% in its home market.

However, the Range Rover Velar experienced a surprising sales drop, losing sales in the US and China, where its BMW X1 rival is selling successfully.

Jaguar remains a curious case, having not replaced the I-Pace as JLR works to relaunch the brand in a much more luxurious form.

JATO’s view: “The Defender is probably JLR’s most successful product over the past years and a very significant part of its current success. But the Velar, considering its age, shouldn’t be posting big drops now.”

Electrification key to growth in global premium market; Germans still on top

Mercedes-Benz looks to have retained its leadership of the global premium market ahead of long-term rival BMW, but the gap between the two is narrowing.

The first EV from Lexus helped it boost its sales by a very healthy 24%, although its total lags significantly behind that of its German rivals.

Volvo also posted a healthy 9% volume increase, aided by its switch to hybrid and electric powertrains.

Last year we included Tesla in this segment, and it was very close to third-placed Audi, but price cuts and the shift of sales to the mid-market Model Y have moved it away from the premium classification.

We also expected Nio to make a bigger impact here, but the long-established Hongqi (‘red flag’) brand remains China’s main premium offering, with around 300,000 sales, predominantly in its home market.

JATO’s view: “The race for second place is hotting up, with Audi closing the gap on its rival from Munich. Electrification is the push: BMW and Audi EVs are selling better globally. Mercedes is also on a slower roll-out of electric models.”

Surprise rise in US thanks to bargain leases and easing of supply issues

Americans love bargain leases and demand immediate delivery of a vehicle, so strong deals and better availability boosted the US market by 13% last year, against expectations.

General Motors is still ahead as a group, while Toyota leads as a brand. GM’s growth (14%) was double that of Toyota (7%) and Ford (7%).

None of them are benefiting from EVs (Tesla dominates that market), but GM is making great progress with its big pick-up trucks and Buick SUVs.

Toyota increased its volume but lost ground as the RAV4 was directly exposed to the Tesla Model Y’s success as the two models are now priced similarly, while the Camry saloon suffered during a generation changeover.

Ford’s growth was driven by the F-150 truck, although sales of the new electric version, the Lightning, failed to spark.

Hyundai and Kia did very well, outselling Stellantis, thanks to strong SUV and saloon line-ups.

With products aligned closely to Toyota’s, the Korean siblings are a good market fit. However, their growth is held back by their lack of trucks. The Hyundai Santa Cruz is too small for American tastes and so grew by just 1%.

Stellantis was stymied by poor results for Jeep, which lost ground as the Compass aged and the Cherokee was discontinued. The Wagoneer failed to take off properly and the Wrangler dropped a disappointing 14%.

Ram didn't help either: the 1500 truck is getting old and a facelift in the second half of the year couldn’t lift sales.

However, Chrysler and Dodge did post growth, despite both needing new products, having been boosted by discounting and strong deals.

JATO’s view: “The 2024 forecast for the US is further growth, considering the strong economic indicators in the fourth quarter, plus a coming election that’s likely to put a new president [surely Donald Trump] on stage.”

Ferrari still unbeatable on supercars; SUVs lift rivals

Ferrari continues to be the gold standard for supercar makers, consolidating its position among fans of the most expensive 200mph two-seaters.

Ferrari has previously settled on production around the 10,000 11,000 mark, and last year was no exception, as it matched its 2022 performance.

While Maranello’s balance of sales might shift slightly in 2024, with the high-rise, fourdoor Purosangue in its first full year, it ’s unlikely to go as far down the SUV road as Lamborghini or Aston Martin.

Lamborghini delivered a record 10,112 cars in 2023, of which over 6000 were Uruses, while Aston Martin delivered around 6700, of which about half were DBXs.

McLaren is sticking with a twoseat, two-door, purist machinery formula for now, and its volume for the year was heading towards 1900 – a welcome posit ive move.

JATO’s view: “Lamborghini and Ferrari are close in overall sales, but Ferrari is staying pure to its two-seat sports car heritage, where it’s far ahead of rivals. Ferrari is unbeatable in terms of brand recognition.”

Flat-six icon extends lead over V8 rival

Porsche 911 sales grew a significant 22% year on year, JATO’s preliminary figures show, taking the eighth iteration of the rear-engined sports coupé to an incredible 47,000.

In 2020, Chevrolet gave the Corvette a much wider appeal by moving its engine into its middle for its eighth generation, and three years on the American ‘coop’ is still growing commercially. However, the gap to the 911 has widened.

JATO’s view: “These two are the ‘volume’ sellers and quite close, but the 911 keeps its leading position, thanks to a global presence, unlike the Corvette, whose sales are concentrated in North America.”

Coupé market led by BMW and American ponies

The BMW 4 Series family is doing a good job, despite the controversy about its design and a small sales decrease.

However, it ’s being pushed hard by the Ford Mustang, sales of which have remained more buoyant as it has entered its seventh generation.

In fact, V8-powered pony cars still represented an important market in the US – but it faces an uncertain immediate future. Both the Dodge Challenger and the Chevrolet Camaro have been retired without direct replacements in the pipeline, while the Dodge Charger is being turned into an elect r ic car – a highly controversial move among enthusiasts, even if it's new Stellantis tech does promise them “sledgehammer performance”.

JATO’s view: “It’s unclear yet whether moving these iconic names to electric power will work in the market, given the reluctance of American drivers to switch to EVs.”

Brits and Germans keep affordable flame alight

Toyota’s lively rear-driven coupé and Mazda’s nimble roadster generated just over 50,000 sales between them last year, and while the GR86 lost some ground to the MX-5, it still retained its best-seller status.

Enthusiasm for both dropped off in their home market of Japan, but the UK offset some of the lost volume for the GR86, while Germany and the US rallied to the MX-5 with stocking 64% and 45% increases respectively.

JATO’s view: “With relatively low sales, it isn’t clear whether Toyota and Mazda will keep these models in the future. Enthusiasts will hope so, but the march of electrification is a threat [despite both having signalled a desire to make electric performance cars].”