Germany Loses Its Auto Industry To China | China's Take Over Shakes The Entire Europe Market

Germany Loses Its Auto Industry To China | China's Take Over Shakes The Entire Europe Market

#german #market #automobile

The grand stage, the International Automobile Exhibition, where Germany's auto giants usually flaunt their groundbreaking wheels, is witnessing a plot twist. Picture this, a group of Chinese automakers has rolled up in such droves that German media is in a panic.

Normally, IAA showcases Germany's automotive prowess every two years, making jaws drop with cutting-edge innovations. But not this time. Instead of oohing and aahing at German marvels, all the buzz revolves around one seismic shift—the imminent influx of electric vehicles from the Far East, poised to crash the party in their homeland.

In fact, a prominent business weekly exclaimed that IAA has become the China show, while Der Spiegel boldly declared stormy weather for the German automotive industry. Germany has already faced a reality check thanks to Elon Musk's Tesla, which swiftly dethroned stalwarts like Mercedes-Benz and BMW.

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China, the powerhouse of production, boasts an astonishing capacity to manufacture around 40 million vehicles annually, a revelation brought to light by Süddeutsche Zeitung.

This formidable output eclipses even their domestic demand, leaving them with a formidable surplus, nearly 15 million more vehicles than their domestic market necessitates. To put this surplus into perspective, it surpasses the entirety of Europe's car market, an eye-opening fact that sends shockwaves through the hearts of European automakers.

But the Chinese juggernaut doesn't stop there. They've tightened their grip on the electric vehicle revolution, wielding control over a staggering 90% of the world's supply of electric vehicle battery cells.

This unprecedented dominance is made possible through strategic partnerships with industry giants like CATL and Gotion. With cutting-edge technology and massive production capabilities, CATL and Gotion are setting the stage for a global EV transformation, and European automakers are left grappling with the challenge of catching up.

These revelations underscore the immense power shift taking place in the automotive world. China's insatiable appetite for production and its pivotal role in the electric vehicle revolution is reshaping the industry's landscape.

Now, picture this, If China plays its cards right, producing cars like the slick BYD Seal that offer both luxury and affordability, it could leave the rest of the auto industry scrambling for crumbs. The days of relying solely on brand history may be numbered, even for venerable names like Alfa Romeo.

Here's the kicker, China's got its sights set on Europe's turf, and that could mean a major facelift for European industries. Sigrid de Vries, the key player over at Europe's industry lobby group ACEA, sums it up nicely: China's got its eye on the European market, and it could shake things up in ways we've never seen before.

German automakers had a field day in China's booming car market. But in the past decade, they've been playing catch-up. Chinese auto mogul Li Shufu, the brain behind Geely, snatched up the biggest slice of Mercedes-Benz back in 2018. This move was so politically edgy that even his government cautioned him not to ruffle European feathers by buying even more shares.

Initially, brands like Mercedes cozied up to local Chinese companies, hoping these partnerships would boost their small car lineups, which were trailing behind. Mercedes even handed over half of its stake in Smart, the mini car brand famous for its parallel parking prowess, to Li's Geely.

Meanwhile, BMW jumped into bed with Great Wall Motors to juice up its electric MINI, set to roll out from China next year. Back then, it seemed like a match made in heaven. But here's the plot twist: Volkswagen, once the uncontested champion since it smartly tapped into China's market in 1984, is now forking out a whopping $700 million to get cozy with Chinese newcomer Xpeng.

Why? They need a crash course in connected cars to stay in the game. As the German business daily Handelsblatt put it, Ignore? Cooperate? Imitate? German carmakers are in a frenzy, trying to figure out how to tackle this fresh competition head-on. The race is on.
For years, experts have been predicting a surge of affordable Chinese cars flooding Western markets, similar to what we saw with Japanese and later South Korean imports.

However, some Chinese brands previously skimped on crucial aspects like performance and safety, with the Jiangling Landwind in 2005 earning quite the reputation as a risky ride.
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