Automotive expert Petr Knap warns that European manufacturers, including Volkswagen, are struggling to adapt to the shift toward electric vehicles and rising competition from Chinese brands.
Key facts
- •Manufacturing a car in Germany is estimated to be 30 to 45 percent more expensive than in China.
- •Volkswagen's annual earnings in China have fallen from roughly €5 billion to about €1 billion.
- •Nearly one in nine cars sold in the European Union is now of Chinese origin.
- •Volkswagen employs nearly 700,000 people across its various divisions and brands.
- •The German automotive industry produces approximately one million fewer cars than it did before the pandemic.
European carmakers are facing a crisis comparable to the decline of companies like Nokia and Kodak as they struggle to adapt to the electric vehicle revolution. Industry expert Petr Knap notes that traditional manufacturers, particularly in Germany, are being challenged by Chinese brands that have gained significant market share. This shift is forcing long-established companies to attempt a rapid transition while operating within high-cost, heavily regulated environments.
By the numbers
Volkswagen's Structural and Governance Challenges
Volkswagen faces a combination of structural issues, including a high-cost manufacturing base in Germany and reduced production levels compared to pre-pandemic figures. Governance is also a hurdle, as half of the supervisory board seats are held by employee representatives, making it difficult to implement major cost-cutting measures. Additionally, the federal state of Lower Saxony holds approximately one-fifth of the company's shares, creating political pressure to protect jobs.
The Impact of Chinese Market Competition
The financial impact of losing ground in China is significant, with Volkswagen's annual earnings in the region dropping from approximately €5 billion to about €1 billion. Furthermore, Chinese manufacturers are increasingly capturing market share within the European Union, where nearly one in nine cars sold is now Chinese. Estimates indicate that manufacturing a car in Germany is 30 to 45 percent more expensive than in China.
Regulatory and Strategic Missteps
Knap suggests that the industry's position was weakened by the 'dieselgate' scandal, which alienated regulators and left the industry with little influence over new rules. He contrasts this with the Chinese government's approach, which fostered competition by setting clear conditions for manufacturers to become global champions. European firms, by contrast, have faced unilateral regulations that have constrained their ability to adapt.
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This article was independently rewritten by ManyPress editorial AI from reporting originally published by EUobserver.
