Erste: European automotive suffers loses, Chinese industry booms
European automotive producers are losing out on the Chinese market, which is still crucial for their sales, according to Erste Group research.
In the past five years, the share of German brands in the Chinese market has decreased by 6 percentage points. “Earlier, for example, Volkswagen sold about a third of its global car production in China in 2023. Over the last ten years, passenger car production in Asia has increased by 33%, and in China even by 68%. By contrast, it has fallen by 11% in Europe and by 24% in Germany,” Erste notes in a report.
Moreover, Europe’s share of global passenger car production has fallen from 28% to 23%, while Asia’s has risen from 56% to 68% during 2012-2023, the document shows.
“The share of European passenger car production in total world production is falling, but European countries are still among the world’s major car manufacturers: Seven of the top-15 passenger car manufacturers are from Europe,” Erste Group notes. “Fortunately, Chinese companies have not yet established themselves in Europe. The most difficult situation today is in the German car industry. The point is that, in Germany, the unit labour costs in the automotive industry are two times higher than in Italy or Spain and three times higher than in the Czech Republic and other CEE countries.”
The most delicate situation is at Volkswagen, whose management plans to close up to three –of 10 – German factories, cut VW employee wages by 10% and conduct layoffs. The unions, on the other hand, want the carmaker to give pay rises, Kallanish notes.
According to the bank, one option is to move production to a cheaper foreign country. “This is already happening, as German production of passenger cars reached a peak before Covid-19 in 2016. It has been declining ever since. On the other hand, in countries like the Czech Republic and Slovakia, passenger car production has been rising,” the report observes.
Global motor vehicle production reached its all-time high in 2017, with 97 million motor vehicles produced worldwide, 70% of which were passenger cars, Erste Group says. Then came the pandemic and production fell by a quarter by 2020.
Production reached 93m units last year and was only 4% below the 2017 record.
Svetoslav Abrossimov Bulgaria
