Last month, the European Commission announced additional tariffs of up to 38.
1% on electric vehicles made in China.
If China takes countermeasures, it could cause trouble for European carmakers.
European auto industry executives said they should be wary of these tariffs, fearing that China’s countermeasures could affect the competitiveness of European cars in China, especially in the current Chinese electric car market.
they already face fierce competition from a growing number of local competitors.
Among them, German automakers are most vulnerable to China’s potential countermeasures.
Almost 1/3 of German carmakers’ 2023 sales came from China, according to trade data.
In addition, it is reported that China’s anti-tariff may apply to cars with engine engines of 2.
5 litres or more.
Exports to china account for about 1% of Volkswagen’s total sales, 2% for BMW, 4% for Mercedes and 17% for Porsche, according to Stifel Research.
However, less than 5 per cent of the 4.
8 million cars delivered to Chinese customers by Volkswagen, Porsche, BMW and Mercedes-Benz in 2023 were exported from Europe, according to the German Association of Automobile Manufacturers (VDA).
Although most of the German cars currently sold in China are made in China, many high-end models are still imported from Germany.
This is the case with Porsche, a luxury brand owned by Volkswagen Group, which has no production plant in China and imports all cars sold in China, accounting for 25% of its global sales.
Given that German cars exported to china tend to be high-end models with sizeable profit margins, Stifel estimates that this will have a negative impact on German carmakers’ operating profits (EBIT) of 4 to 10 per cent.
Porsche, Porsche, Porsche will be most affected by China’s anti-tariff, because Porsche’s sales in China account for 25% of its global sales, but almost all of its cars are made in Germany.
However, analysts at HSBC pointed out in a report this month that Porsche’s luxury brand positioning allows it to raise prices much higher than carmakers in the parity market when it encounters countertariffs.
Last year, Porsche’s deliveries in China fell 15% to 79283 vehicles, while sales fell a further 24% in the first quarter of 2024, in part because of weak demand in the Chinese market.
Currently, Porsche is building a research and development base in Shanghai and unveiling a Taycan model tailored for the Chinese market for the first time at the Beijing auto show.
Porsche Taycan 4 Cross Turismo.
Photo Source: Porsche, Volkswagen, Volkswagen will be least affected by China’s countermeasures, its annual results show that only 2.
5% of the cars the company sells in China are made in Germany.
In 2023, Volkswagen Group, including Porsche and its joint ventures in China, sold more than 3.
2 million cars in China, of which 3.
06 million were made locally.
Audi, Volkswagen’s high-end brand, accounts for a slightly higher proportion of imported cars in china, at just over 8%.
However, Volkswagen will suffer heavy losses if China takes counter-measures, considering that the company still aims to maintain or even increase its market share of 14.
5% to 15% in the face of fierce competition from local carmakers.
Mercedes-Benz, China is the largest market for Mercedes-Benz new car sales, accounting for about 36% of its global sales.
It sold just over 737000 vehicles in China in 2023, of which more than 80 per cent were made locally and the rest were imported.
Mercedes-Benz GLE SUV, S-Class sedan and Porsche Cayenne are the three most popular imported cars in China, according to China Bank International.
Mercedes-Benz exports high-end models such as the S-Class, GLC, G-Class and Maybach to China from Europe and the US, while in China it prefers to produce small cars such as A-Class, E-Class and C-Class models.
BMW, BMW’s car sales in China account for nearly 1/3 of global sales, slightly more than 826000 vehicles, of which about 13% are imported models.
BMW’s imported German models sold in China include the i4, 7-series and 5-series, according to BMW’s financial results.
BMW’s much-anticipated new model, the Neue Klasse series, will be produced in China from 2026.
BMW currently makes cars in China by joint ventures such as China’s brilliance, in which BMW has a 75% stake and has a second joint venture with Great Wall Motor.
The two joint ventures also produce cars exported to Europe, including the iX3 and an electric Mini, which will be affected by EU tariffs.
Analysts at HSBC Holdings, another European carmaker, say Volvo, a Swedish carmaker controlled by China Geely Holdings, derives 1/4 of its sales from the Chinese market, which accounts for about 10 per cent of its total profits.
Imported models account for about 4 per cent of Volvo’s cars sold in China, with the rest made locally.
Stellantis has less exposure to the Chinese market, but recently invested in Chinese electric carmaker Zero cars, which will be responsible for selling zero cars in Europe and plans to export two zero-running electric vehicles from China by the end of the year.
EU tariffs will no doubt also have an impact on Stellantis’s plans.
Like other luxury carmakers, all cars Ferrari sells in china are imported, which account for 9% of its global sales.
However, Ferrari can use its pricing power to make customers pay for tariffs.
French carmaker Renault has less exposure to the Chinese market and operates in China through joint ventures with Jiangling, brilliance and Nissan.
However, Renault’s Dacia Spring electric car, made by Dongfeng Motor, a local partner in China, and exported to Europe, will also be affected by EU tariffs.
In May, Renault also announced a joint venture with China Geely holding Group to jointly develop internal combustion engines and hybrid engines.
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