Alix Study: Pressure on German Manufacturers Increases Enormously - By 2030, One-Third of All Vehicles from China

Chinese automobile manufacturers are increasingly setting industry standards and further pressuring the German automotive industry. This is the conclusion of the latest and 21st edition of the "Global Automotive Outlook" study by global consulting firm AlixPartners. By 2030, Chinese automotive brands will capture about a third of the global market and sell around nine million units outside of China. In Europe, the doubling of the market share of Chinese brands between 2024 and 2030 would come at the expense of European, Japanese, and Korean brands, whose sales volumes would at best remain stable. Chinese automakers leverage their structural cost advantage to expand market share and pass this on to end customers through aggressive pricing strategies. Compared to a European electric vehicle, production costs are about 35% lower, particularly in terms of the battery. Besides the rapid development cycles of about 18-24 months, Chinese car manufacturers are also a step ahead of the global competition in customer orientation, especially in comfort and features of the latest generation of vehicles.

"The traditional business model of the automotive industry in Germany must change if we want to remain competitive. New EU tariffs on Chinese cars can slow imports in the short term and support sales prices, but they will also accelerate the local manufacturing of Chinese vehicles and components in Europe. Additionally, German manufacturers are particularly feeling the competition from Chinese manufacturers in their home country. This especially affects German premium manufacturers, for whom China is increasingly becoming a declining market," said Fabian Piontek, Partner & Managing Director and Head of AlixPartners' Automotive Business in the DACH region.

While many manufacturers have focused on electromobility in recent years, demand for electric cars is particularly slowing in Germany. The market share of new electric vehicles will reach 20 percent in Europe by 2024, and according to the latest study, it is expected to be 45 percent by 2030. The short-term growth of electric vehicles corresponds to an average annual increase of 16 percent until 2030. A revision of EU regulations with a postponed sales ban on internal combustion engine vehicles until 2035 seems like a realistic option in this context.

"There is still great uncertainty in the electric sector regarding which solutions and infrastructures will ultimately prevail. This makes intelligent investment decisions challenging for German manufacturers. In individual sub-markets outside Europe, we see, for example, increasing acceptance of plug-in hybrid vehicles. For German and European OEMs, the variety of drive variants that currently need to be maintained to serve the market leads to ultimate capital destruction," said Fabian Piontek.