Why is output falling? Are there other countries taking the market share? Or is there more to it?
> But a profit warning by German carmaker BMW late on Tuesday was the latest reminder of the industry’s structural challenges as it struggles with the transition to battery cars, weak sales in China and US import duties.
My gut feeling is that the Chinese are now buying locally made EVs. Other nations are buying Chinese made EVs. Except the Americans, who can't afford anything without paying extra money to their Mad King. (This is generalized, obviously there'll be American or Chinese BMW buyers, but a lot less).
Damn, look at that graph of registrations: https://carnewschina.com/2025/10/08/byd-sales-surged-2225-in...
IOW, they're not dumping, they're doing the opposite. I don't know why.
If they're doing the opposite yet end up a lot cheaper with higher quality and more features, I'm really not sure what's going on. Don't see how they could be cheaper either.
1. Competition in China is fierce, there are over 100 car companies. A large fraction of them are losing money. BYD et al are lowering prices to drive their competitors in China bankrupt. They've got higher prices outside of China to enable this behaviour.
2. They're quite sensitive to the dumping charges, so bend over backwards to ensure they aren't.
1) Ever since the Cold War ended, German companies have been shifting production to cheaper places in Europe, so less and less "German" cars are actually built in Germany and show up as German industrial production.
2) Germany used to sell a lot to China, but Chinese companies are upping their game and shifting to EVs, and Germany is losing Chinese market share as a result.
3) Those same Chinese companies are increasingly selling overseas and starting to kick German butt. I went to an EV car show recently, and while Volkswagen Group had a large presence (VW, Audi, Cupra, etc) and some of their EVs looked pretty good, the prices were consistently 20-50% above the equivalent Chinese models.
The German industrial sector might be shy at importing most of their parts from Asian developing countries and China in order to keep friendly relations with their domestic supply chain, keep friendly relations with their domestic political system, reduce IP cloning and keep some semblance of national pride, all of which combine to impact their prices. Also, there may be legal or tax requirements about domestic or EU component origin percentages, but I wouldn't know, since my business was in medical appliances.
In general the ICE car market is not just car manufacturers but many thousands of companies all over the place that make parts and components. Quite a few of those are becoming redundant and quite a few more are facing stiff competition from abroad. Anything to do with components for petrol or diesel engines is going to face year on year declines.
What's currently happening in the market is price parity before incentives, before considering benefits from lower maintenance, and before considering benefits from lower energy cost. An EV is simply becoming the cheaper vehicle to buy. And with all that included, EVs are far cheaper overall. That's not a trend that's ever going to revert. It's only going to get worse and it's going to have some obvious effects.
A lot of this applies to US car manufacturers as well BTW. The current tariffs are distorting the market dynamics. But that's unlikely to last very long. GM and Ford will need to keep up internationally if they want to stay relevant in foreign markets.
Germany is merely ripping off the band-aid right now (or having it ripped off for them). Short term disruptive but it needs to happen at some point.
Nowadays quality has become an issue, where you could, back in the day, drive your Mercedes for 500.000km over a 30years lifetime, nowadays you are lucky to make it past the factory warranty. Along with quality, repairability, tuneability and parts availability and prices have worsened significantly. So German cars are no longer a safe bet on longevity and low lifetime cost, which is what drives away export customers as well as German private customers.
The only thing that has so far kept the German car industry afloat is tax subsidies towards German corporate customers: If your employer offers you a car as part of your salary, you only pay monthly taxes on a flat 1% of the sales price of the car, and for that, the employer can freely give you the car, maintenance, fuel for private and company use, all included. While the employer pays cheap company leasing rates and discounted gross fuel prices, and can offset all that whole spending against the company tax bill. So overall a good deal for employer and employee, and a huge boon to the German car industry (because practically all company vehicles have to be some German brand for prestige).
However, nowadays, the full tax deduction is only available for plug-in-hybrid and electric cars, ICE vehicles only get half the deduction. And the plug-in-hybrids will soon be classed down to ICE status. All the while German car makers struggle to offer proper electric cars at acceptable prices. All the while their plug-in-hybrids suffer from poor quality and life expectancy, expensive repairs and therefore expensive insurance and low resale value.
This means that German car makers will continue to lose their last reliable customer base.
Look at a brand new, not cheap Audi Q3 with it's hard plastic grey on grey interior and then compare it to something like a Zeekr X or Xpeng G6 et al. It's night and day quality and feel.
- Crumbling infrastructure
- Decades of missing investments in education and the public sector
- no digitization
- Unwillingness to move away from ICE vehicles
- Slow internet access and slow build out of fiber network
- Killing future industries (solar, battery ...) by cutting funding/subsidies early
- low wages in European comparison
Is it? Because that's definitely how China is doing it:
https://rhg.com/research/chinas-subsidies-are-fueling-involu...
So their industrial problem can't be fixed with subsidies, as in subsidies not capable of improving long term DE competitiveness without subsidies. Even if they automate workfroce and remove social benefits, lack of access to cheap industrial feedstock is precluding, i.e can't offset structurally disadvantage of being more expensive producer on input level.
The big problem imho is that due to greed and technical incompetence (especially regarding electronics and software), quality and value have gone down. The high prices are no longer justified, and customers are drawing the logical conclusion.
> Slow internet access and slow build out of fiber network
We don't have dial-up anymore. High-speed access is not a problem for commercial and industrial sites, and rarely a problem for remote work in residential areas. Despite what some commentators like to imply, you don't need 1 Gbit/s for productive work. 100 Mbit/s is usually fast enough, and if your browsing experience is still slow, it's most likely caused by round-trip delay, not bandwidth.
> low wages in European comparison
That would actually help commercial output and competitive position, not lower it.
In rural regions workshops output is limited by their internet speed as the can only download that many CAD files from customer per day.
All things considered they aren't doing too bad, both Volkswagen and BMW are in the global top 7 EV brands by sales. But BYD is far ahead of everyone else, selling nearly an order of magnitude more EVs than any German brand. Which hurts Germany especially since they used to sell a lot of cars in China, BYD's home turf
Porsche (having the same CEO as Volkswagen) went all-in with EVs too early with offering their bread-and-butter model "Macan" as an EV exclusively, and they had to find out that it's not what their customers what at the moment, so they are currently trying to backpaddle.
They cut off their main energy supplier and opted for a much more expensive one.
Cheap RU gas isn't just power, it's cheap industrial feedstock/inputs. Renewable/nuclear does not replace this. So all the wank about their energy policy is distraction. TLDR:
Competitive Germany industry needs cheap RU gas.
Healthy German economy with 40% trade GDP needs US + PRC, then RoW markets.
PRC market going away.
Germany "chose" (maybe pressured) into expensive US gas to keep US market, because doesn't matter manufacturing cost if you lose biggest future market, and can't manufacture without reliable source of gas. The lockin is DE gets US gas and US market access.
But Germany with expensive US gas = will eventually lose competitiveness in most other markets, so sectors will crater. Double whammy of other (PRC) being more competitive and DE making it self even less competitive.
The counterpoint to that is JP has to sacrifice (shadow subsidize exports) by managing exchange rate, i.e. JP went from 5-6T nominal GDP to 4T just through FX depreciation in last 20 years. They import expensive inputs but fx/account/spreadsheet their way into selling (up until PRC auto) competitive cars, which really domestic JP households pay for by essentially subsidizing exports (i.e. household -> industry transfer) which worked for a while with low / negative interest rates, but that era coming to end last few years ("easy" era with yen carry trade) and now there is CoL crisis especially for imports. Meanwhile PRC auto is eating at their shares.
Germany being stuck with Eurozone/eurobux has much less ability to pull this lever - they can't unilaterally devalue euro. So JP currency manipulation game, which itself is short/medium term trick that broke down with PRC's structurally cheap autos isn't option. If DE could play the FX game same will happen, they can prop up some sales (though long term can't compete with PRC producer prices), in exchange for domestic purchase power tanking.
TLDR if German could do a JP, which they can't, it will result net smaller German economy by essentially having germans subsidize exports and eat buckets of shit via imports, BUT MUCH WORSE THAN JP. JP still "only" 20% export:gdp, DE is 40%. Imagine Germany go from 4.5T GDP to to 2.5T. It would be anniliation.
E: Forgot this is all WHILE JP is still importing cheap RU LNG from Sakhalin2, despite US pressure, and only got US to back off buy also buying some LNG from alaska. Meanwhile US told Germany to jump off a cliff and they did.