MUNICH: Major automakers will showcase their latest models at Munich’s car show on Monday as Europe’s automotive sector faces crises ranging from US tariff hikes to costly electrification and the expansion of Chinese automakers on their home turf.
Aside from a product blitz to counter Chinese models being pushed to European consumers, including by BYD, Changan and GAC, domestic firms will focus on lobbying to persuade the European Union to reconsider its 2035 ban on combustion-engine cars.
Attention will also be on US President Donald Trump’s tariffs on European-made cars.
Even if a US-EU trade deal agreed in July goes ahead, European automakers would face a 15% tariff that could force them not to sell less profitable models in the US European automakers at the IAA Mobility show in Munich, running from September 9-12, also face sinking sales in China, the biggest single market for Volkswagen, BMW and Mercedes-Benz.
Meanwhile, auto executives and lobby groups are pushing hard for the EU’s fossil-fuel car ban, which is up for review by the end of 2025, to be scrapped or changed.
BMW CEO Oliver Zipse called the ban a “big mistake” on Friday, seeking emissions regulations instead, that capture a vehicle’s entire supply chain.
Danijel Visevic, managing partner at climate tech-focused venture capital firm World Fund, said such lobbying by European automakers was “stupid” and that “they should put their energy into building the best, cheapest cars to out-compete the Chinese.”
China remains the biggest challenge for Europe’s auto industry.
According to consultancy AlixPartners, as recently as 2020, global automakers had a 62% market share in China, which shrank to 46% in 2023 and could drop to 28% by 2030.
Porsche has felt that pain acutely after seeing its Chinese sales fall 28% in the first half, and will suffer the ignominy of dropping out of Germany’s benchmark blue-chip index on September 22 - almost three years to the day since its landmark initial public offering.
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That will further raise pressure on Oliver Blume, CEO of Porsche parent Volkswagen, to drop his unpopular dual role as Porsche’s CEO.
Chinese automakers also pose a problem for the likes of Volkswagen in Europe. According to JATO Dynamics, Chinese brands almost doubled their European market share to 4.8% through July this year versus the same period in 2024.
And consultants McKinsey estimate that within a decade, Chinese automakers could command a share equal to what Japanese and Korean automakers enjoy now, of 14% and 9%, respectively.
Phil Dunne, a managing director at consultancy Stax, said Europe’s automakers have moved too late to counter this threat after years of complacency, and now, “the Chinese are here to stay.”
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