The IAA motor show in Munich this week highlighted the immense pressures facing Germany’s auto industry as it grapples with European Union climate policies and an aggressive Chinese push into the electric vehicle (EV) market.
On Monday, September 8th, Volkswagen CEO Thomas Schäfer presented the company’s new EV line-up and sought to convince his audience that the Wolfsburg-based giant can regain its footing after years of sliding sales and market share.
“We set the standards … We are attacking,” Schäfer said, according to media reports, but participants at the auto show were not impressed. The model offensive is right, but “it’s too late,” one visitor muttered, while another suggested the Chinese “are technologically far ahead.”
The combined share of German carmakers across their three core markets—Europe, the United States, and China—has fallen below 20% for the first time in decades.
With profits under pressure, Volkswagen is planning to cut 35,000 jobs by 2030. In Germany, the auto sector has already shed more than 50,000 jobs over the past year, according to the EY consulting firm
On another stage at the IAA show, BYD, China’s largest EV maker, unveiled its Seal 6 DM-i Touring, designed “specifically for Europe and especially for Germany.”
A company representative promised to grow “at autobahn speed,” while announcing plans to triple its German dealerships to 300 by 2026.
The message was one of confidence, in stark contrast to VW’s embattled tone, according to Berliner Zeitung.
Chancellor Friedrich Merz, who opened the show on Tuesday, September 9th, echoed industry frustration with Brussels.
While stopping short of rejecting the EU’s ban on new combustion engine sales from 2035, he called for “smart, reliable, and flexible European regulation” and warned against “unilateral political commitments to specific technologies.”
Bavaria’s prime minister Markus Söder was blunter: “This combustion engine ban is wrong.”
Their intervention reflects growing alarm that the EU’s green agenda risks crippling European manufacturers before they can catch up with their Chinese rivals.
Carmakers from VW to BMW and Mercedes complain that the 2035 deadline is “not realistic.”
Stellantis, the U.S.-European conglomerate behind Jeep, Fiat, and Peugeot, has likewise urged a rethink, warning of massive job losses.
This year’s IAA hosts 116 Chinese exhibitors, up sharply from 75 last year, with firms like XPeng and GAC joining BYD in staking their claim to Europe’s future roads.
Not every EU member, however, views China’s advance as a threat. Hungary has actively courted Asian investment, while maintaining its position as one of Europe’s top manufacturers of German cars.
BMW will soon open its first all-electric plant in the eastern city of Debrecen, while BYD will start production at its new electric-vehicle plant in southern Szeged by the end of this year.
Prime Minister Viktor Orbán’s China-friendly strategy, coupled with generous subsidies, has turned the country into a rising hub for e-mobility. Budapest is reaping the benefits of the electric transition, writes Frankfurter Allgemeine Zeitung.
