Chinese sedan and SUV brands outperformed Japanese brands in Western Europe during the second quarter, marking the first time this has occurred, according to Schmidt Automotive Research. Local manufacturers, led by Volkswagen, lost nearly three percentage points of market share in the first half of the year. Overall, European auto sales rose 13% in June to 1.38 million vehicles, with electric vehicle sales increasing by 52%, driven by higher gasoline and diesel prices due to geopolitical tensions, including the Iran conflict.
Key Details
Volkswagen has faced significant challenges amid increasing competition from Chinese automakers, which are reportedly at least 30% more efficient and leading in electric vehicle (EV) technology. Hildegard Mueller, head of the German automotive industry association, stated that job cuts and plant closures are likely across the European auto sector. Volkswagen has indicated that it may need to eliminate up to 100,000 jobs and close four factories as part of restructuring efforts. Mueller emphasized,
Not every production location can be there in the future, so there must be programs for restructuring,
according to Automotive News Europe.
Background
Meanwhile, foreign luxury car brands have also struggled in China, with sales of premium vehicles from companies like Mercedes-Benz and BMW declining sharply. The China Passenger Car Association reported that luxury car deliveries fell 29.5% year-on-year last month, with a total of 162,224 vehicles sold. This decline is attributed to a shift in consumer preference towards lower-priced electric vehicles amid rising crude oil prices. The luxury segment, once dominated by international brands, is increasingly challenged by Chinese manufacturers, according to Zhao Zhen, a sales director at Shanghai dealer Wan Zhuo Auto.
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The decline in sales for both European and foreign luxury automakers could lead to increased volatility in the automotive sector, particularly affecting shares of companies like Volkswagen and luxury brands. Investors will be closely monitoring restructuring plans and market responses to the growing competition from Chinese EV manufacturers.
Watch for further developments regarding the European Union's Industrial Accelerator Act, which aims to address the challenges facing the automotive industry.