Italy’s car production fell 22.9% in 2025 — the steepest decline among all European Union member states — as the country dropped out of the global top 20 vehicle producers and recorded its lowest passenger car output since 1954.
According to ACEA’s annual economic and market report and industry data, total Italian car production fell to 237,975 units, placing the country tenth among EU producers.
The South European country was surpassed by Portugal, which built 240,400 vehicles during the same period. Two years ago, Italy produced 546,440 cars.
Output has now been cut by more than half.
Stellantis, which operates the vast majority of Italy’s automotive manufacturing capacity through its Fiat, Alfa Romeo, Maserati, Lancia, and Jeep brands, produced 379,706 vehicles in Italy in 2025 — down 20% year over year.
Passenger car output alone fell 24.5% to 213,706 units.
The collapse has made a political target of a number that was once a point of national pride.
Prime Minister Giorgia Meloni’s government set an ambition in 2023 of one million vehicles produced annually in Italy — a target Stellantis has repeatedly missed.
Italy’s share of total EU car production fell to 2.1% in 2025, down from 4.5% in 2023.
Germany led with 35.2%, followed by Spain (15.4%), Czechia (12.6%), Slovakia (9.4%), and France (8.6%). Italy now sits in the same tier as Sweden (2.2%) and Portugal (2.1%).
Among the top ten EU producers, France posted the strongest gain at 15.5%, followed by Slovakia at 8.1%. Italy’s 22.9% decline was the worst, followed by Sweden at 12.8%.
Registrations Declining
On the demand side, Italy’s new car registrations fell 2.1% to 1,524,843 units in 2025, making it one of only two top-five EU markets to post a year-over-year decline alongside France, which dropped 5.0%.
Italy remains the EU’s third-largest market by volume with a 14.1% share, but Spain — which grew 12.9% to 1,148,650 units — is closing the gap.
The difference between the two markets shrank from more than 500,000 units in 2023 to approximately 376,000 in 2025.
Italy also recorded the lowest battery electric vehicle penetration of any major EU market.
BEVs accounted for just 6.2% of new registrations — roughly one-third of the EU average of 17.4% and far below Denmark (68.5%), the Netherlands (40.2%), and Belgium (34.7%).
Italian buyers have instead shifted heavily toward non-plug-in hybrids, which captured 44.1% of the market — the second-highest share in the EU after Poland at 45.7%.
Combined petrol and diesel vehicles still accounted for 34.1% of registrations.
Meloni has called the EU’s 2035 ban on new fossil-fuel car sales “self-destructive” for the industry, a position that aligns with Italy’s consumer market but puts Rome at odds with Brussels on the bloc’s decarbonisation timeline.
Meloni’s Political Stance
The prime minister has taken an increasingly vocal position on the auto sector, framing it as a matter of national industrial sovereignty.
In a January 2024 parliamentary address, Meloni accused Stellantis of a “French bias” following the 2021 merger of Fiat Chrysler and PSA Group, describing it as a de facto takeover that weakened Italy’s manufacturing footprint.
She pointed to approximately 7,000 job cuts since the merger and the offshoring of production lines.
“If you want to sell cars on the international market advertised as Italian jewels, then these cars need to be produced in Italy,” Meloni said, according to AP News.
After the resignation of Stellantis CEO Carlos Tavares in December 2024, Meloni pledged to “do our best to defend employment levels and, in the case of the automotive industry, the supply chain.”
New CEO Antonio Filosa and Chairman John Elkann have described 2026 as a “crucial year,” with a major industrial plan expected at the company’s Capital Markets Day in May.
Two Italys
Italy’s luxury and high-performance segment — Ferrari, Lamborghini, and the upper end of Maserati — remains largely insulated.
Ferrari continues to expand production at its Maranello and Modena facilities and plans to launch its first fully electric model in 2026.
Lamborghini‘s Revuelto hybrid is sold out into late 2026, with production continuing at Sant’Agata Bolognese.
The component sector has also held up better than final assembly. Italy’s automotive supply chain comprises approximately 2,100 companies generating more than €55 billion in turnover, with a positive trade surplus in the first half of 2025.
The divergence between a thriving luxury niche and a collapsing volume base defines the current state of Italian automotive manufacturing.
Early 2026 Signals
Italian car production rose 34.5% in January 2026 compared to the same month a year ago, according to ANFIA, the Italian automotive industry association — though the figure reflects a very low base of approximately 17,500 units in January 2025.
The domestic market has also rebounded, with registrations up approximately 9–10% year to date through the first quarter, led by strong demand for the Fiat Grande Panda and Panda hybrids.
Whether the recovery is sustainable depends largely on Stellantis‘s investment decisions for its Italian plants, the pace of new model launches, and the political and regulatory trajectory of the EU’s 2035 decarbonisation deadline.
Broader EU Context
The ACEA report showed that global car registrations rose 3.5% to 77.6 million units in 2025, driven by a 5.5% increase in China to 24.2 million vehicles.
EU registrations grew 1.8% overall but remained 2.2 million units — or 17% — below 2019 pre-pandemic levels.
Cars manufactured in China now account for 7% of all vehicles sold in the EU, up from 5% in 2024. Chinese imports surpassed one million units for the first time, rising 30.7% in volume.
The EU’s car trade surplus narrowed to €76 billion, its lowest since 2021.
Italy’s GDP is forecast to grow just 0.8% in 2026, according to the European Commission — among the weakest in the EU and well below the bloc’s 1.4% average.
The auto sector, which contributes approximately 6% of national GDP and supports over one million direct and indirect jobs, remains central to the country’s industrial outlook.
