Chinese car makers challenge European industry

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【Summary】Chinese car makers are set to showcase their new electric models at the IAA auto show in Munich, challenging European manufacturers who have been lagging in the e-mobility race. European car giants are facing difficulties due to increased energy costs and stiff competition from Chinese brands offering vehicles at lower prices. Chinese manufacturers, including BYD and Leap-motor, make up 41% of exhibitors at the show.

FutureCar Staff Sep 03, 2023 6:14 AM PT

Chinese car makers challenge European industry

Chinese manufacturers are set to showcase their new electric models at the upcoming IAA auto show in Frankfurt. This event, one of the industry's largest, will see them compete with German car makers who have been lagging behind in the e-mobility race. Even Elon Musk's Tesla, which typically avoids such events, will make an appearance in Munich, aiming to steal the spotlight from Europe's biggest brands. However, the automotive sector in Europe, particularly in Germany, is facing challenges.

European auto giants are currently struggling with increased energy costs following the Russian invasion of Ukraine last year. While supply chain problems have improved since the pandemic, sales in the European Union remain about 20 percent below pre-coronavirus levels due to inflation and higher interest rates. Moreover, European manufacturers are facing stiff competition from Chinese car makers, who offer vehicles at significantly lower prices and have gained a large share of the Chinese market.

Industry analyst Ferdinand Dudenhoeffer believes that Chinese groups are launching their assault on Europe with the IAA, marking a turning point for the industry. About 41 percent of exhibitors at the fair have their headquarters in China, including brands like BYD and Leap-motor. They hope to overshadow German giants Volkswagen, BMW, and Mercedes-Benz. In contrast, participation from other European makers is limited, with Opel being the lone ambassador for US-European conglomerate Stellantis in Munich.

Climate groups have vowed to protest at the IAA, focusing on the shift from combustion engines to electric vehicles and the broader climate issue. These protests may include civil disobedience to disrupt the fair. The previous edition of the show in 2021 already faced small-scale protests, and this time around, around 1,500 people are expected at a camp in a suburban Munich park advocating for a revolution in mobility. Car manufacturers have been criticized for their growth imperative and the impact it has on people's lives worldwide. The industry's massive profits, driven by strong inflation, have further fueled the growing climate consciousness movement.

The IAA moved from Frankfurt to Munich in 2021 to improve its image and attract a wider range of participants. It aims to be a festival for all forms of mobility, including bikes and scooters. Traditional motor shows have struggled to attract manufacturers, leading to dwindling visitor numbers. The Paris Motor Show in 2022 saw many big European names absent, while Chinese car makers like BYD were present. The IAA hopes to reinvigorate these events and create enough publicity to make them worthwhile for manufacturers.