Problems for VW, BMW, Mercedes and Co. in China: “Vulnerability risk increases significantly”

VW, BMW, Mercedes and Co.
German automakers are losing ground in China: “The risk of vulnerability is increasing significantly”

The German car manufacturers have major competition problems in China. A recent study warns: “The risk of vulnerability increases significantly.” That’s why VW, BMW, Mercedes and Co. are going on the offensive at the Shanghai Auto Show these days.

In 2022, more than 23.5 million passenger cars were newly registered in China, and around every fourth car is already electric. The sales and profit opportunities in the world’s largest automotive market are therefore great. According to Stefan Bratzel from the Center of Automotive Management (CAM) in Bergisch Gladbach, the market importance of China for German car manufacturers is currently at a record high.

However, at the same time the competition is increasing. Local manufacturers dominate the e-car market and are increasingly putting German car manufacturers under pressure. Not only big names like BYD, SAIC, Geely and Tesla are pushing ahead here, but also newcomers like Nio or Xpeng.

Chinese car manufacturers more successful than German ones

BYD is of great importance in electromobility. According to a recent CAM study, the Chinese manufacturer is one of the most innovative players. BYD was able to increase its vehicle sales by 150 percent last year, making it the second largest automaker in China behind Volkswagen. Most recently, BYD increased its sales by 90 percent compared to the same period last year. With electric vehicles, BYD is even the market leader with a market share of 18 percent. This is followed by another Chinese company, SAIC, with 11.9 percent, and US electric car manufacturer Tesla is in third place with 8.7 percent. VW only achieves a market share of 3.1 percent here. According to the study, Chinese companies generally play a key role in networking and autonomous driving, while German car manufacturers are in the red.

In terms of vehicle sales in China, German automakers are heavily dependent on the People’s Republic. “Due to the increasing geopolitical tensions and the high level of competition among Chinese companies, the risk of vulnerability is increasing considerably,” summarizes Bratzel. With regard to the price reductions initiated by Tesla, the study also predicts an increase in cost pressure in the field of electromobility. Industry expert Ferdinand Dudenhöffer also told the German Press Agency: “If you don’t want to lose customers, you have to make significant price and margin concessions for electric cars.”

VW, BMW, Mercedes and Co. present new models

In order not to lose further ground in China and to counteract the competition, it is now important for the large German car manufacturers to convince with their electric cars. That’s why they presented new models before the start of the important auto show in Shanghai this Tuesday (April 18). On Monday, the evening before the trade fair, VW presented the all-electric ID.7 sedan for the first time. The electrification strategy for the Chinese market is being “driven at full speed,” Volkswagen announced at the start of the trade fair. VW will accelerate its decision-making and development processes in China, said CEO Oliver Blume. The ID.7 is scheduled to start in Europe and China from autumn 2023, while counterparts to the Stromer are to be produced in the People’s Republic.

Porsche, a brand of the Volkswagen Group, presented a revised version of the Cayenne – not as a pure electric car but as a plug-in hybrid. “It is one of the most extensive product upgrades in the history of Porsche,” announced Michael Schätzle, head of the Cayenne series, in a press release.

Mercedes also used the Shanghai auto show as an opportunity for a world premiere: its luxury brand Maybach presented its first all-electric model, the EQS SUV. The German competitor BMW also presented three new electric models at the fair, including the new, all-electric top model BMW i7 M70 xDrive and the BMW iX1. The latter was only produced for the Chinese market. “BMW stands for innovation, for top products and a broad approach to technology. In this way, we serve the individual needs of our customers, especially here in China,” says Oliver Zipse, Chairman of the Board of Management of BMW AG.

Sources: CAM study, VW, bmw, Porschewith material from the dpa