Chinese carmakers confront European industry at Munich show

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MUNICH – Chinese manufacturers will be out in force at next week’s IAA auto show, one of the industry’s biggest, revving their new electric models on the turf of German carmakers, which have been lagging in the e-mobility race.

Elon Musk’s Tesla, usually a hold-out from such events, will also make an appearance at the show in Munich, joining the jostle to steal the spotlight from Europe’s biggest brands. 

The industry fair, which opens on Tuesday with a speech from Chancellor Olaf Scholz, comes with clouds gathering for the automotive sector in Europe and in particular, Germany.

While suffocating supply chain problems have eased from the pandemic years, European auto giants are struggling to cope with increased energy costs in the wake of the Russian invasion of Ukraine last year.

Although sales in the European Union have steadily improved over the last 12 months, they remain around 20 percent below their pre-coronavirus levels as inflation and higher interest rates dampen appetite for new vehicles.

At the same time, European manufacturers are facing increasingly stiff competition from Chinese carmakers which are touting their vehicles at far lower prices.

Local upstarts have captured an increasingly large part of the prized Chinese market and are threatening to dominate the growing trade in electric vehicles.

Chinese groups were starting “their assault on Europe with the IAA”, said industry analyst Ferdinand Dudenhoeffer from the Center Automotive Research in Germany.

“The IAA 2023 maps out a new automobile world in Europe. Competition will be tougher. After the Chinese’s battery factories, their automobile makers are coming,” he said, calling it a “turning point” for the industry.

In all, 41 percent of exhibitors at the industry fair have their headquarters in China, including brands such as BYD and Leapmotor which will hope to steal the spotlight from German giants Volkswagen, BMW and Mercedes-Benz.

Contrary to the Asian onslaught, participation from other European makers is muted.

Opel will be US-European conglomerate Stellantis’s lone ambassador in Munich, while Renault is showcasing only its eponymous marque at the show.

In contrast, Musk’s Tesla was slowly falling in line with traditional manufacturers as “the brand that doesn’t do marketing begins to do exactly that” with its first appearance at the IAA, said independent analyst Matthias Schmidt.

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