The European automotive sector is experiencing significant turmoil, marked by declining sales and escalating production costs, coupled with fierce competition from Chinese rivals.
Massive Restructuring Among Manufacturers
Volkswagen AG, Europe’s largest automaker, is negotiating potential layoffs of thousands and may close plants in Germany. The company has already put its Audi factory in Brussels, employing 3,000, up for sale due to reduced demand for premium electric vehicles.
Stellantis, the second-largest European automaker, plans to shut the Vauxhall factory in Luton, England, threatening around 1,000 jobs. Repeated shutdowns at its Mirafiori plant in Italy are also due to low demand, particularly for the electric Fiat 500.
Ford is set to cut 4,000 jobs in Europe, representing 14% of its workforce, primarily in Germany and the UK.
Component manufacturers are similarly affected, with Valeo announcing 1,000 layoffs in Europe and the closure of two factories in France. Schaeffler AG plans to shut two production facilities in Austria and the UK and reduce operations at its Berndorf plant due to rising costs.
Bosch aims to lay off up to 5,500 employees by 2032, while Michelin will close two factories in France, impacting around 1,250 jobs.
EU Imposes Tariffs on Cheap Chinese Imports
Chinese automakers are ramping up hybrid vehicle exports to Europe, launching new models to navigate EU tariffs on electric vehicles. Analysts predict a 20% increase in Chinese hybrid vehicle exports to Europe this year.
New tariffs, effective for five years, are aimed at countering perceived unfair subsidies in China. Tariffs for major Chinese brands range from 17% to 35% on electric vehicles, while Tesla will face a lower rate of 7.8%.
As a result of these tariffs, Chinese manufacturers are shifting strategies, focusing on hybrid vehicles which are gaining popularity among consumers seeking affordable alternatives to fully electric cars.
China's Growing Presence in the Hybrid Market
Between July and October, hybrid vehicle exports from China to Europe surged over threefold, accounting for 18% of total Chinese vehicle sales in Europe in Q3. BYD’s new plug-in hybrid model, Seal U DM-i, is priced competitively against established models from Volkswagen and Toyota.
Geely has introduced a new plug-in hybrid under its Lynk & Co brand, while other Chinese manufacturers are eyeing the European market for hybrid and electric models, responding to rising consumer demand for cost-effective vehicles.
In November, new car registrations in Europe fell by 2% year-on-year, despite a 0.9% increase in battery electric vehicle sales and a 16.4% rise in hybrid sales. The total number of new registrations reached 1.055 million in November.