This article reviews innovation of the European transport industries. It combines a quantitative analysis of the R&D investment of manufacturers of transport equipment, transport service providers and the constructors of transport infrastructure for the years 2008 and 2011 with a qualitative assessment of their incentives to innovate. The latter takes into account sector-specific innovation systems, their distinct market environments and the products and services produced. The findings show that, although the transport sector as a whole is the largest industrial R&D investor in the EU, there are important differences in the level of innovation activities carried out by the highly heterogeneous sub-sectors. These differences seem to be of systemic nature: they are found consistently in the quantitative analysis and the theoretical considerations. The result is highly policy-relevant as it indicates that policies targeting innovation in transport need to take into account the specific innovation capacities of the various sub-sectors