The punch Europe threw did not land on Chinese vehicles, but hit Japanese cars hard.

"I almost thought IAA was the Munich Auto Show," a friend joked.

Indeed, for many years, the three letters referred to in the automotive industry stood for Internationale Automobil-Ausstellung, once known as the "Olympics of the Automotive Industry". Most people are familiar with its old name - the Frankfurt Motor Show - which was relocated to Munich after 2021.

But this year, it no longer only refers to a grand event, but also points to a ruthless official document, serving as the abbreviation of the Industrial Accelerator Act.

It seems like a shield to safeguard Europe's local industries, but in fact it is an inaccurate machete. Ostensibly aimed at the surging Chinese automobiles, it has first left Japanese-branded cars trembling with fear.

Yoshihiro Nakata, CEO of Toyota Europe, said a very pointed sentence in Brussels: "Toyota is not a guest in Europe." However, the localization of Japanese new energy vehicles in Europe is far less prominent than that of Chinese brands.

As a result, the IAA Act has become a thunderclap that explodes over the heads of Japanese cars before it even reaches Chinese vehicles.

Europe wants to reshape the geographical landscape of the automotive industry through a local content rule, but it seems to have forgotten that the most successful "European enterprises" in the last round of globalization are precisely those with the most extensive supply chain layouts.

The Monroe Doctrine was not the biggest contributor to America's prosperous era. If European manufacturing replicates the "Monroe Doctrine", it will never get a savior.

01 Accelerator "Off Target"

The EU wants to add a layer of protection for local industries through the Industrial Accelerator Act. The idea is straightforward: Chinese electric vehicles are arriving too fast, so by setting a 70% local component content requirement, subsidies are limited to "Made in Europe" products, which can at least block part of the incremental market.

But after the protection measures are actually implemented, the first to be affected are not BYD's Hungarian factory, nor Chery's production lines in Spain - these Chinese automakers have already built their factories inside the threshold. The ones that are truly blocked outside are Japanese-branded cars.

In the first nine months of 2026, Japanese brands sold a total of about 1.18 million vehicles in Europe (EU+EFTA+UK), with a market share of 11.9%, still being a force that cannot be ignored in the European auto market.

Looking at this 1.18 million units alone, Japanese brands have no reason to panic. Models like Yaris Cross, Corolla and C-HR still have a solid presence on European streets. A starved camel is bigger than a horse, not to mention Japanese brands are far from being "starved".

But if you look at the sales structure, you will find that what Europeans and Japanese worry about is not the total volume, but the incremental growth.

In the same period, Geely Group sold 343,875 units, ranking eighth; BYD sold 283,997 units, more than doubling year on year, ranking ninth. Chery Group sold 260,650 units, with a growth rate of 255.9%; Leapmotor sold 87,922 units, with a growth rate of 424.2%.

In the third quarter of 2026, the combined market share of Chinese brands in Europe reached 12.7%, surpassing the 11.9% share of Japanese brands for the first time.

Looking inside Japanese brands, the differentiation is also obvious. Nissan's European sales from January to September were 205,387 units, down 10.5%; Mitsubishi sold 23,701 units, down 34.1%. The Toyota Group is not only the only player with a positive year-on-year growth rate of 0.5%, but also the largest share in the 11.9% Japanese brand market share, accounting for 936,000 units alone with a 7.1% share, firmly ranking as the second largest passenger vehicle brand in Europe.

In the European market, Japanese brands' performance depends on Toyota, and Toyota's performance depends on hybrid vehicles. Hybrid vehicles account for 87% of Toyota's European sales.

Auto Commune believes that a few years ago, the strong performance of hybrid vehicles was a good thing, but in Europe in 2026, the situation is not so optimistic.

The first problem is the market trend.

We once judged that with the advancement of batteries and energy replenishment, China's auto market has entered the "pure electric era". Back then this was a model for the Chinese market, but now Europe is following China's trend. The driving force of growth in the European auto market is shifting from hybrid vehicles to pure electric vehicles. In June 2026, sales of new pure electric vehicles in Europe surged 51% year on year, and the combined share of pure electric and plug-in hybrid vehicles surpassed that of fuel vehicles for the first time.

The CTO of Renault mentioned many times in an interview with Auto Commune that in the first quarter of 2026, the new energy penetration rate of Renault's European sales increased from 20% to 50%, of which pure electric vehicles accounted for half.

The second problem is the IAA Act.

Japanese pure electric products in Europe, including the bZ4X and C-HR+, are imported from Japan, and the Urban Cruiser comes from India. Yoshihiro Nakata himself admitted that in 2025, Toyota Europe imported vehicles worth 6.9 billion euros from Japan.

The rules of IAA are very clear: to receive subsidies, 70% of the value of components excluding batteries must come from Europe, and the complete vehicle must be assembled in the EU. Almost all of Japanese brands' pure electric product lines are disqualified.

Japan's Minister of Economy, Trade and Industry has repeatedly negotiated with the EU on behalf of the Japanese side, and Toyota has also proposed a compromise plan, hoping to replace the rigid threshold with a "co-manufacturing" standard, but Brussels has not loosened its stance, and the reason is legitimate: the policy is not targeted at Japan, but to support the local industrial chain.

That being said, the accounts will not change just because the reason is legitimate. Japanese brands are not "targeted", they are screened out by a rule that does not distinguish nationality but only recognizes geography, based on their place of origin.

02 Inside and Outside the Wall, Things Go Against Expectations

IAA is nominally a wall, but the most ironic thing is that the people it wants to block have already entered inside the wall.

BYD's Hungarian factory is in preparation for production, Chery uses the production capacity of the former Nissan factory in Spain to assemble vehicles, SAIC has finalized the plan to build a factory in Spain, and Leapmotor is promoting local production with the help of cooperative factories.

These actions did not start after the act was introduced, but the effect just makes it difficult for the act to restrict Chinese automotive brands. When the 70% threshold officially takes effect, the European origin status of BYD and Chery will be more "compliant" than the import status of Japanese brands.

We don't have to insist that Chinese automakers are more "European" than Japanese brands. The underlying reason is that the decision-making pace of Chinese automakers on electrification has just coincided with the pace of European policy advancement.

Chinese automakers sell new energy vehicles in Europe, without historical burdens such as old production lines and internal combustion engine workers, and factories can be arranged following the products.

The basic market of Japanese brands in Europe is hybrid vehicles. The supply chain, production capacity layout and supplier relationships of hybrid vehicles have been built over decades, which cannot and should not be moved. But when the policy links subsidies to the local content of pure electric vehicles, the good hand of hybrid vehicles in Japanese brands' hands has become a problem under the IAA.

Nissan's decline can better illustrate the problem. Nissan once had the Leaf in Europe and had a first-mover advantage, but the update pace of its pure electric product line failed to keep up with the turning point of the European market from "early adoption" to "large-scale popularization".

In the first nine months of 2026, the number of Nissan Ariya registrations in Europe was only three digits, Toyota's bZ4X only had 771 units, and the C-HR+ just exceeded 1,200 units.

These numbers are so small that they are almost invisible in the total 1.18 million units of Japanese brand sales. But the European pure electric market has an annual growth rate of 51%, and the share that is invisible today will become a visible gap tomorrow.

Japanese brands are not unresponsive. The launch of the C-HR+ and bZ4X Touring made Toyota Europe's BEV sales more than double in the first nine months, reaching 104,832 units, with a growth rate of 136%. This is real progress.

But the direction of progress does not align with the incentive direction of the policy: the more you sell, the more exposed it is that your vehicles are imported from outside; if you want to get subsidies, you have to move more production processes to Europe.

Moving pure electric production capacity to Europe requires time, suppliers, and a new supply chain that is quite different from the hybrid system. Whether Europe will give them this time is another matter.

03 The Ruthlessness of "Origin-Only Recognition"

There is a popular argument that Japanese brands have been operating in Europe for so many years, employing so many people, contributing so much tax revenue and engineering jobs, so the EU should not treat them the same as a pure importer in the rule design.

This statement makes emotional sense, but it does not hold up legally.

The local content clause of IAA is essentially not a tariff or a quota, but a set of rules that determine who is eligible to receive subsidies. It does not ask whether you have a history in Europe, but only asks how much value of your vehicle is generated on European land.

Toyota Europe has R&D, design and engineering teams, but a large number of core components of pure electric models and complete vehicle assembly are carried out in Japan and India. The rule does not need to deny the "European identity" of Japanese brands, it only needs to replace "identity" with "origin" at the subsidy threshold. In the end, all the past history is reduced to a certificate of origin.

What is more noteworthy is that this set of rules may punish "globalized enterprises" more severely than "export enterprises".

Japanese brands are one of the groups with the highest degree of global supply chain integration, and their competitiveness precisely comes from arranging different links in different regions: engineering from Japan, plug-in hybrid production capacity from Turkey, cost advantages from India, and brands and channels in Europe.

Globalization used to be its advantage, but in a system that redistributes subsidies according to origin, the advantage has become a burden. You cannot enjoy the efficiency of global division of labor while asking a set of rules that only reward local production to make an exception for you.

Philipp Seidel from Arthur D. Little pointed out a deeper risk: even if manufacturing and assembly remain in Europe, R&D, technology development and engineering capabilities may continue to shift to China.

IAA only focuses on the percentage of components, but cannot control where technical capabilities go. If Europe thinks that 70% local content can lock the future of the automotive industry within the EU, what it locks may only be some seats, glass and wiring harnesses, while the next iteration of electric drive, software and battery chemistry can still happen elsewhere.

Back to Japanese brands. Their current situation is not that "Japanese cars are dying", let alone "Toyota has failed in Europe". The annual sales volume of 1.18 million units, 11.9% market share, and Toyota's 87% hybrid share, these figures show that the foundation of Japanese brands in Europe has not been shaken.

The real problem is that the policy environment does not match Japanese brands' product structure. Europe wants localized pure electric vehicles, while Japanese brands' advantage lies in hybrid vehicles; Europe wants subsidies to flow to "Made in Europe" products, while Japanese pure electric vehicles are imported from Japan.

Yoshihiro Nakata said "Toyota is not a guest in Europe". The real weight of this sentence does not lie in whether Toyota should be treated as a guest, but in whether a rule that only recognizes origin has the ability to distinguish between hosts and guests.

At least judging from the current draft, it cannot distinguish. It only counts percentages. And Japanese brands' pure electric product lines have nothing to say for the time being in the face of these percentages.

Before Europe exerts pressure on Chinese automobiles, it first makes a group that regards Europe as its home taste the feeling of being an "outsider".

In the end, an attack with insufficient judgment may turn into a misdirected punch at any time, failing to hurt the enemy but hurting the ally first; failing to hurt others but hurting itself first.

This article is from the WeChat Official Account "Auto Commune" (ID: iAUTO2010), written by Shi Jie, authorized for release by 36Kr.