As we move further into 2025, the European car market is contending with a complex and dynamic landscape. Discounts and incentives, long a staple of the automotive sales process, are now a pivotal factor in shaping competition, pricing strategies, and profitability. Understanding how these incentives are evolving across the Big 4 European markets (Germany, France, Italy, and the UK) offers crucial insights for automotive manufacturers (OEMs) aiming to navigate turbulent times.
In the first quarter of 2025 alone, the automotive industry in the four major EU countries distributed an more than €1.5 billion worth of discounts to private car buyers. This highlights the strategic importance of discounts in maintaining market share, driving sales, and maximising revenue. More than just price reductions, incentives encapsulate a variety of elements, such as cash discounts and trade-in offers to government contributions aimed at boosting electric vehicle (EV) adoption.
OEMs face a strategic balance with incentives, as data shows excessive discounting correlates with reduced profit margins while limited incentives often lead to market share losses against more competitive offerings. This balance has become increasingly complex amid the heightened market volatility observed throughout recent quarters.
Germany and the UK see steep increases: Both Germany and the UK experienced notable increases in average discount amounts compared to 2024. In Germany, for example, the average discount grew by a substantial 31%, reaching an increase of €618 per vehicle. Similarly, the UK saw an increase of €237. These increases can partly be attributed to rising vehicle prices in both countries, which in turn necessitate larger discounts to maintain competitiveness.
Declines in Italy and France: On the flip side, countries like Italy and France experienced a decrease in average discounts. Italy, in particular, now boasts the lowest average discount within the Big 4. In France, the decrease was driven by the fading impact of government contributions, specifically, incentives for EVs, which have been a major driver of discounts in 2024.
Chart 1 Source: JATO Dynamics
One of the most telling aspects of discount trends in the EU car market is the breakdown of how these discounts are structured. The lion's share of incentives typically comes in the form of cash discounts, which include flat price reductions, stock clearance offers, and finance-related discounts. However, there is notable variation in how other types of incentives, such as scrappage/trade-in offers and government contributions, play out across different countries.
While trade-in incentives are particularly significant in Italy, they represent a smaller portion of total discounts in markets such as Germany and France. In the UK, trade-in discounts have become increasingly important, with their relevance now comparable to that in France.
Government incentives have experienced a dramatic decrease in several countries. In Italy, incentives have vanished entirely in 2025, while in France, government contributions have shrunk by nearly 50% compared to the previous year. These incentives are no longer available in Germany and the UK in 2025.
The regional variations in discount structures illustrate how local market contexts significantly influence incentive effectiveness. The data demonstrates that regulatory environments, consumer preferences, and economic conditions all factor into the varying impact of different incentive types across markets.
Chart 1 Source: JATO Dynamics
In order to understand discount trends, we must also evaluate incentives within the broader context of list prices. Looking at the relationship between price increases and discount strategies helps us to better understand the bigger picture of what is happening across each market.
Italy and France show a clear pattern where registrations are led by B Segment vehicles, both SUVs and hatchbacks. This creates a proportionally lower level of average discount and a lower average list price than in Germany and the UK.
Interestingly, both Germany and the UK have seen a more substantial increase in vehicle prices compared to other countries in 2025, which, combined with rising discounts, indicates a market where high-value vehicles are competing on price as well as features. Germany saw price increases of €1,215 (2.8%), while the UK experienced increases of €1,280 (3.1%).
In countries where discounts are decreasing, prices are either increasing less dramatically (Italy +€453, or 1.5%) or even decreasing (France -€949, or -2.9%). The latter is driven by factors such as a lower share of EVs and a higher share of B segment vehicles compared to the previous year.
It's worth noting that while Germany and the UK have discount levels in Q1 2025 similar to Italy's Q1 2024 figures in absolute terms, these discounts represent only about 5.7% of retail price in Germany and the UK, compared to 8.2% in Italy during that period.
Chart 3 source: JATO Dynamics
For automotive manufacturers, these trends suggest that the pressure to provide competitive discounts will only increase as new players (including EV-focused brands) continue to challenge traditional carmakers. Through strategic management of incentive programmes, OEMs can effectively respond to changing consumer demand, while protecting their bottom line.
The ongoing transition to electrification and hybridisation doesn’t come without its challenges but it will also create opportunities as government incentives for EVs help to push increased demand for greener vehicles.
Being flexible and adapting quickly to market changes is the key to success. Those manufacturers who keep up with shifting market conditions, will be better placed to update incentive structures in line with consumer preferences, competitor movements, and regulatory changes.
At JATO, we specialise in providing in-depth, cross-country data and insights to help automotive manufacturers navigate the complexities of incentive strategies. Our global team of analysts leverage a wealth of data on retail incentives, factoring in various aspects as vehicle registrations, model mix, and market-specific trends to develop tailored reports and intelligence. With a dedicated team of consultants and analysts, JATO Advisory empowers OEMs to make data-driven decisions that align with their objectives to help them stay competitive in a complex and rapidly changing environment.
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This analysis leverages JATO's comprehensive datasets to provide unique cross-country comparisons of automotive incentives across France, Germany, Great Britain, and Italy. Using JATO Incentives Navigator solution data, we weighted discounts to private customers by relative vehicle registrations from the JATO Model Mix database. Our standardised methodology normalises incentive categorisation and calculations across different markets, accounting for trade-in/scrappage discounts, price reductions, flat discounts, and government incentives—applied to vehicles registered to private customers in Q1 2024 and Q1 2025. For consistency in cross-country comparison, values for Great Britain were converted to Euro. This analysis focuses exclusively on average potential discounts applicable to final private customers without considering additional dealer contributions, which would introduce significant variability across countries, brands, and models, potentially altering the comparative landscape substantially.