Chinese car brands are closing the gap with European ones in insurance risk classes, challenging long-held assumptions about repair costs and complexity.
European car insurance advantage shrinking
European car manufacturers have long had an edge in car insurance costs, but a new Allianz study shows this advantage is rapidly disappearing due to the rise of Chinese car brands. The study highlights how Chinese cars are catching up in terms of risk classification, which affects insurance premiums.Risk classes determine insurance costs
In Germany, each car model is assigned a risk class based on historical insurance claims. Lower classes mean lower insurance costs. In 2024, European cars had an average of three classes higher than Chinese cars. By 2026, this gap has narrowed to just one class, with Chinese cars improving significantly and European cars declining slightly.Understanding risk class calculations
It is important to note that risk classes are based on historical claims data, not the actual cost of repairs. A better risk class does not necessarily mean a car is cheaper to repair in absolute terms. It reflects the frequency and cost of claims over time.Chinese manufacturers improve repair networks
Chinese car brands are making visible improvements in their repair and service networks. More dealerships and workshops are opening, and spare parts are being stored closer to customers. This helps reduce the time a car is immobilized after an accident, which lowers both repair and insurance costs. Brands like BYD and MG are also working to integrate insurance considerations into their design process.European cars become more complex
On the other hand, European cars are becoming more complex and expensive, with features like advanced safety systems that are harder and more costly to repair. This complexity makes it harder to predict repair costs, which can lead to higher insurance premiums and less predictability for consumers.Cautions about the study
Some caution is needed in interpreting the study. Many Chinese models are relatively new, so their risk class rankings may not be stable yet. Additionally, Allianz, the insurer behind the study, provides advice to Chinese manufacturers and authorities, which may influence the findings.Market penetration and challenges
As of January 2026, Chinese car brands have a 5.8% market penetration in Germany, with MG and BYD accounting for nearly 70% of registrations. However, challenges remain for smaller brands, including limited dealer networks and long wait times for repairs. Some buyers express doubts about the availability of spare parts and after-sales support.Sustainability of Chinese presence in Europe
China has over 100 car brands in Europe, but many sell little or operate at a loss, relying on exports to stay afloat. If one of these brands exits the European market, it could create problems for customers in terms of spare parts, repair services, and resale value.
