German car manufacturers fear the Chinese

German car manufacturers fear the Chinese

According to the German press agency DPA, the important Asian car trade fair “Auto Shanghai 2023” opened with a declaration of war by the German car manufacturers. The electrification strategy for the Chinese market is being “driven forward at full speed,” announced Volkswagen boss Oliver Blume. The background: Volkswagen and the German auto industry as a whole are in a difficult situation in China. Around one in four cars sold in China is already electric. But unlike with combustion engines, German brands have so far played little role in electric cars in China. Local brands dominate there. In order to send a strong signal, Volkswagen held the world premiere of its new ID.7 on the evening before the trade fair. The Wolfsburg-based company has high hopes for the new electric sedan in China. Mercedes, in turn, showed a fully electric version of its luxury brand Maybach for the first time in Shanghai on Monday evening.

Industry expert Ferdinand Dudenhöffer sees the Germans facing major challenges. In March alone, sales of pure combustion engines in China fell by around one percent, while sales of pure electric cars and vehicles with plug-in hybrid drives (NEV) rose by more than a quarter. According to Dudenhöffer, the Germans are also struggling with the price war that is raging on the Chinese market. “Tesla and the Chinese are ahead in price and cost competition,” he says. There is still a lot of money to be made in China with combustion engines, but if you don't want to lose customers, you have to make significant price and therefore margin concessions for electric cars. Western car manufacturers would have to recalibrate their production processes for electric cars, says Dudenhöffer. Anyone who simply continues with the current pricing and production strategy will lose customers.