He whispers in a low voice, but under the buzz of the new bright car models and the bright lights in the largest car hall in Europe, the industry sector is worried that his party is over.
The prices and profits in the China key market are in decline, the demand is warm in Europe and the United States, the tariffs have created an uncertain panorama, putting the focus on cost reduction as the global market is remodeled.
“The party we have been celebrating in the automotive industry for decades has ended in its current form,” said Oliver Blume, CEO of Volkswagen, the largest car manufacturer in Europe, and its Porsche AG luxury division.
“Now it’s reorientation.”
The sector faces an adjustment of accounts, exacerbated by the pressure to change to electric vehicles with strict objectives by 2035 in Europe that many feel that they cannot meet, even when Chinese electrical vehicles are ahead of local brands with lower cost models.
That is what Volkswagen, Mercedes-Benz, BMW, Porsche and Renault on the defensive. In the IAA Mobility Automobile in Munich, they launched models from affordable electricity level vehicles to luxury SUV.
By 2032, European car manufacturers plan to launch 350 new unprecedented electric vehicles, according to McKinsey, before an imminent prohibition of cars with a combustion engine in the EU from 2035, something that opposes Germany car manufacturers.
“The coming years will definitely be years of truth,” said Patrick Schaufuss, a partner of McKinsey, adding that Europe’s car manufacturers needed faster and faster and simplified products to keep up with the agile Chinese rivals.
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‘The party is over’ while European car manufacturers face tariffs and a price war in China
Porsche, who saw car sales in China fall by 27.9% in the first semester, is adjusting its local dealers network, and the CEO Blume is skeptical about future perspectives, effectively abandoning a long -term margin target of 20% for now.
“The luxury market (Chinese) no longer exists,” Blume, VW chief and his Porsche brand, told Reuters, adding that the Volkswagen group was betting on substantial investments in the United States, ideally flanked by incentives.
BMW is depositing hopes that its new IX3 model grows again in China, said Sales Chief Jochen Goller.
Goller said that BMW was monitoring the “brutal price war” in China while evaluating the prices of the new model, which will be launched in the summer of 2026.
Mercedes-Benz, which will launch around 40 new models by 2027 and has its fully electric GLC to recover its market share in China, is also cutting billions of euros in costs, and the CEO Ola Kaellenius said that the fierce competition in China would continue.
Renault, who left the Chinese market about five years ago, will introduce more affordable batteries for electric vehicles and accelerate the development times of all models, elements that have been in the center of the expansion efforts of Chinese car manufacturers.
“Our Chinese competitors are the best in their class, we have used them as a reference point,” said CEO Francois Provost.
With Reuters information.
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