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European carmakers turn to Chinese rivals to salvage struggling plants

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European carmakers, struggling with severe headwinds and halted assembly lines across numerous plants, are turning to Chinese rivals to salvage their operations.

A report by the Financial Times outlines the perilous situation facing factories across the continent, particularly in Italy.

The sprawling Fiat automobile plant in Cassino, located 130 km southeast of Rome and once an engine of the local economy, has taken on a desolate, near-abandoned atmosphere.

The facility’s 2,200 employees are summoned to work only a few days a month. In the first half of 2026, the plant produced just 6,700 cars, representing a minuscule fraction of its annual capacity of 300,000 units.

Denise Tisci, a 40-year-old mother of three who has worked at the plant since 2007, has not worked a shift since May and relies on a government temporary lay-off scheme alongside her colleagues.

“We have cut back on many things, even basic, simple things like taking the children out for a pizza,” Tisci said. “Having to look our children in the face is deeply humiliating.”

Fiat workers expect Stellantis, the automaker’s parent company, to seek a Chinese solution for the Cassino plant, mirroring its recent agreements in Spain and France with Leapmotor and Dongfeng.

This situation is not unique to Fiat, as a growing number of European carmakers turn to Chinese competitors to resolve issues caused in part by their rapid expansion into the region.

Emanuele Cappellano, head of European operations at Stellantis, told the Financial Times regarding the company’s recent partnerships in China:

“This is not just a way to survive and catch up with our new rivals, but also an opportunity to boost sales volume and achieve growth in Europe.”

A total closure of the group’s Italian factories has been ruled out, and Cappellano noted that a solution for Cassino will be found by the end of the year.

As the company seeks a partner to revitalize its struggling Maserati brand, a likely scenario involves collaborating with a Chinese group with which it already maintains ties.

This could involve either its electric vehicle (EV) joint-venture partner Leapmotor or state-owned Dongfeng.

“Any partner that moves its production to these factories is not a problem for us. The crisis in the automotive sector is impacting the entire economy,” said Enzo Salera, Mayor of Cassino, adding that local retailers and restaurants have also been severely affected.

European automotive production accounts for approximately 7% of the continent’s GDP and provides employment to roughly 14 million people.

With regional car sales remaining roughly 3 million units below pre-pandemic levels and Chinese rivals capturing market share, other companies have begun adopting new strategies to survive.

Nissan is collaborating with Chery in the UK, Volkswagen continues discussions with Xpeng, and Ford has signed an agreement with Geely in Spain.

Jim Baumbick, head of Ford in Europe, remarked last week while announcing the collaboration with Geely: “The environment in Europe has changed forever. The objective is to achieve the lowest possible cost.”

According to AlixPartners, plant utilization rates in the European automotive sector are running below 60%, leaving a total production capacity of approximately 2.5 million vehicles potentially idle.

Stellantis is doubling down on a strategy that some industry executives view as a short-term fix, but one that could prove self-destructive if local supply chains and technological know-how are not reinforced.

Stellantis has invited Leapmotor and Dongfeng to manufacture models at its facilities in Spain and France.

The Dongfeng agreement was broadly welcomed by French workers because it could help save a 1960s-era plant in Rennes, Brittany.

Like many other Stellantis plants in the country, the Rennes facility had been reduced to a single assembly line, with surrounding land sold off.

Laurent Oechsel, a representative of the French CFE-CGC union at Stellantis, asked: “Right now, Chinese-made cars are sitting in our ports. Do we want to keep fighting against this as the textile sector once did, or do we want to continue producing cars in France alongside the Chinese?”

The challenge for European policymakers, carmakers, and trade unions is to ensure that manufacturing partnerships preserve employment while bolstering the region’s supply chains with Chinese technology.

Currently, many Chinese vehicles marketed as being produced in Europe are equipped primarily with parts manufactured in China and shipped to the EU for final assembly.

Adolfo Urso, Italy’s Minister of Industry, told the Financial Times:

“If the objective is to establish a technological industrial partnership that can fill the factory, keep it viable, and help protect the supply chain, that is welcome. Provided, of course, that people come to Italy to produce, not merely to assemble.”

While partnerships are common among carmakers, European manufacturers hope to learn how to produce cars faster and more cheaply through Chinese alliances.

In return, Chinese brands want to scale up European manufacturing ahead of strict new local content rules that Brussels plans to enforce in mid-2027, aimed at driving investment into the continent, creating new jobs, and enabling technology and skills transfers.

Under the Industrial Accelerator Act, the EU proposes a 70% local content threshold for car parts to qualify for subsidies or public procurement. Local battery production is also expected to commence in the future.

Major uncertainties remain regarding the extent to which Chinese companies will transfer technological know-how and intellectual property rights, as well as how quickly they will begin utilizing European-sourced components.

In Spain, where the government successfully persuaded Chinese companies such as battery maker CATL, Chery, and SAIC (owner of MG) to set up factories, no guarantees have yet been secured regarding technology transfers or the proportion of local labor and components to be used.

Deep concern prevails across the automotive supply chain, where component manufacturers employ twice as many workers as carmakers.

“Those of us working in the supply chain could be at risk,” said Marco Leone, 62, an employee at a firm manufacturing sheet metal fenders for the Cassino plant.

Similar concerns surround Nissan’s agreement to share production at its Sunderland plant with Chery starting next year.

Sources familiar with the discussions stated that three models would be produced for the Chinese group, which also owns the Jaecoo and Omoda brands.

Ian Henry, an automotive manufacturing expert who leads the consultancy AutoAnalysis, warned: “Suppose that in the first year, the cars are essentially produced from kits originating in China. That is great for workers on the assembly line, but not necessarily as beneficial for employees in Nissan’s press shop, body shop, and paint shop, or for local tier-one suppliers.”

Henry added that Chery would need to rapidly increase its localization rate to export to the EU, but the timeline remains uncertain, and discussions continue over whether UK-produced cars will be included within the “Made in Europe” framework.

A source close to the talks noted that the higher cost of utilizing UK suppliers also presents an obstacle.

Chinese automotive executives stress their commitment to using local supply chains, while acknowledging that the transition will not occur overnight.

Charlie Zhang, executive vice president of Chery International, told the Financial Times:

“Localization is a gradual process; it is measured not by the calendar, but by the maturity of supply chains, cost structures, and our readiness to become part of the local industrial ecosystem.”

Analysts argue that sluggish demand in China and the pressure to boost exports represent the primary obstacles to localization in Europe.

With the government pressing manufacturers to utilize idle capacity, China’s global exports are projected to rise by 41% this year, exceeding 10 million units.

Thomas Besson, head of automotive research at Kepler Cheuvreux, noted: “Because domestic demand in China has fallen well short of expectations, the pressure on Chinese automakers to export is far greater. Despite frequently expressing their intentions, Chinese carmakers have not yet begun producing significant volumes of vehicles in Europe.”

The “Made in Europe” proposals will further drive up car manufacturing costs in Europe, potentially forcing some Chinese producers with smaller sales volumes to forgo European subsidies and continue exporting in the near term.

A senior executive at a Chinese carmaker stated: “If it becomes financially too expensive, we will pay the tariff and continue shipping cars [from China].”

For certain Chinese carmakers like BYD, joint ventures make little strategic sense.

Stella Li, top executive for international operations at BYD, described a joint venture as “impossible,” stating: “I think it is better to manage on our own. Asking for permission is very difficult. We make our decisions in five minutes.”

BYD plans to commence mass production of its vehicles in Hungary by the end of this year. However, the “Made in Europe” proposal has prompted the company to seek a second site in Spain or France before completing its factory in Türkiye as previously announced.

Not all European carmakers are pursuing Chinese partnerships. Some analysts argue that companies operating independently can react faster to market shifts, with no guarantee that Chinese partners will succeed in Europe.

“I believe companies that remain independent retain far greater control,” said JPMorgan analyst Jose Asumendi.

Europe

Bill to drop NATO membership goal submitted to Ukrainian parliament

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A bill proposing to enshrine neutral status in the constitution and abandon the goal of joining the North Atlantic Treaty Organisation (NATO) has been submitted to the Ukrainian parliament.

According to a report by the Strana portal, the proposal was introduced to the parliamentary agenda by lawmaker Anna Skorokhod.

The drafted constitutional amendment stipulates that Ukraine must not participate in military alliances and must confirm that it harbours no aggressive intentions against any state.

The text notes that neutrality status should be registered through “guaranteeing non-participation in any military alliance and confirming the absence of intent to attack any country.”

While the bill submitted by Skorokhod aims to remove the NATO goal from the constitution, it envisages maintaining constitutional guarantees for the country’s course towards full European Union (EU) membership.

NATO goal in constitution took effect in 2019

The strategic goal of EU and NATO membership enshrined in Ukraine’s constitution was adopted in February 2019, during the tenure of then-president Petro Poroshenko.

The constitutional amendments in question obliged the government to implement this course and designated the president as the guarantor of the process.

Poroshenko, who assumed the leadership of the European Solidarity party in May of that year, has led the party ever since.

Advocating Euro-Atlantic integration, Poroshenko described EU and NATO membership in a 2026 assessment as one of the country’s long-term security guarantees.

Moscow insists on neutrality condition

The Moscow administration links a potential resolution to the war in Ukraine to a series of conditions that Kyiv must fulfil.

These conditions include the withdrawal of Ukrainian troops from the Donetsk, Luhansk, Zaporizhzhia, and Kherson regions, as well as the international legal recognition of these territories, alongside Crimea and Sevastopol, as Russian soil.

Ukraine’s formal renunciation of NATO membership maintains its weight among Moscow’s primary demands.

Russian officials state that Ukraine’s neutral status must be explicitly included in future agreements.

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AfD softens EU exit stance to seek reform of bloc and eurozone

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Alternative for Germany (AfD) is reportedly debating a reform of the European Union’s structure, backing away from its longstanding demand for Germany to exit the EU and the eurozone.

An internal party strategy paper obtained by the daily newspaper Die Welt and the news agency Reuters signals a new phase in the organisation’s European policy.

The document in question was drawn up by the party’s lawmakers in the European Parliament, the Bundestag, and state parliaments, and was discussed at a meeting held last month.

The drafted proposal envisages transforming the eurozone into a looser alliance of sovereign states.

Under the plan, member states would be held more accountable for their own national debts, while the intervention powers of the European Central Bank (ECB) would be curtailed.

According to Die Welt, the initiative aims to place the euro single currency on a permanent footing anchored in individual responsibility and liability.

AfD seeks structure focused on internal market and security

According to the strategy paper, AfD advocates restricting the remit of the EU primarily to the internal market, the protection of external borders, security matters, and selected technology projects.

The party also demands that member states be granted national-level opt-outs in policy areas such as migration, social services, and fiscal policy.

Rene Aust, head of AfD’s European Parliament delegation, asserted that the document demonstrates the party’s “pro-European orientation”.

Aust noted that they wish to improve cooperation with neighbouring states, protect trade and freedom of movement, and jointly defend external borders.

In contrast, AfD lawmaker Peter Boehringer stated that the paper should not be viewed as a change of course, describing it instead as an implementation plan designed to put existing principles into practice.

The text proposes that, should the envisaged reforms fail to materialise, Germany’s future European and monetary policy should be determined by the public through a referendum.

The draft further calls for abandoning the direct popular election of members of the European Parliament, proposing instead that representatives be appointed via national parliaments.

Separatist line remains in party platform

AfD had long demanded Germany’s departure from the EU (“Dexit”) in an explicit nod to Britain’s Brexit process, advocating its replacement with a newly established European community composed of independent sovereign nations.

The party’s current official platform retains the objective of quitting the bloc and establishing a new European Economic Community if fundamental reforms cannot be realised.

A draft election manifesto had similarly argued that Germany must withdraw from EU membership to liberate the country from foreign domination.

Party co-leader Alice Weidel said in late August that the euro was an unstable currency and argued that a campaign should be mounted for Germany to exit the eurozone.

Weidel claimed that Germany was in a distinctly better economic position prior to adopting the single currency, asserting that working-class populations are currently being impoverished.

Weidel also claimed that, should they come to power, they would close national borders and withdraw from the Schengen Agreement, arguing that open borders threaten domestic security.

According to a polling average compiled by Politico, AfD ranks first across Germany with a 28% share of voter support.

The Christian Democratic Union (CDU), led by Chancellor Friedrich Merz, sits in second place at 19%, while the Greens place third at 15%.

At the beginning of October, national support for the party was recorded as reaching the 30% mark for the first time, while backing for the governing CDU/CSU bloc slipped to 18%.

AfD placed first in two state parliamentary elections in September. On 7 September, the party secured first place in the state of Saxony-Anhalt with 43.8% of the vote, whereas the governing CDU recorded 17.2%, its lowest result since 1998.

AfD also finished ahead in the state election in Mecklenburg-Western Pomerania on 20 September with 38.2%.

The Social Democratic Party (SPD) took 35.5% in the state, while the CDU, which fell to 4.9%, was shut out of a state parliament for the first time in modern German history.

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Marine Le Pen unveils fiscal programme pledging French budget cuts

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Marine Le Pen, the National Rally (RN) candidate for the French presidency, has presented her principal budget proposals ahead of next year’s elections.

Under Le Pen’s plan, a “golden rule” to be enshrined in the constitution would be approved by referendum, capping future budget deficits at levels consistent with a gradual reduction of France’s debt burden.

The French leader pledges to restore the primary budget balance within 18 months of taking office.

The proposals project reducing the public deficit to below 3% of GDP by 2030 and to below 2.5% by 2032, the final year of the next presidential term.

Public debt would be lowered from approximately 121% in 2027 to 112% of GDP by 2032.

A spending reduction programme totalling 140 billion euros would be implemented by 2032, offset by tax cuts of at least 30 billion euros.

By the end of the presidential term, public spending would be brought down to below 50% of GDP.

Le Pen said that once France regains control of its public finances, discussions should be held with the European Central Bank (ECB) to intervene in order to ease borrowing costs.

Support was proposed from the ECB to finance energy transition investments and decarbonisation projects.

The plan sets a target to achieve “carbon neutrality” before 2050 and to publish a new national low-carbon strategy.

The programme also includes a proposal for EU economies with high carbon emissions to contribute more to the EU budget through a new carbon-based contribution formula.

In addition, she called for a global initiative to tackle mounting public and private sector debt, including stronger international cooperation against tax evasion and tax fraud.

On immigration, the proposals call for tightening controls and implementing a “national preference” policy, which she stated would generate savings of 15 billion euros in the first year and 29 billion euros in a full year.

Regarding the EU, France’s annual net contribution would be reduced to 5 billion euros. There is also a proposal to finance part of the EU budget through EU-wide harmonised taxes on tobacco and alcohol.

Le Pen noted that this would also help combat cross-border fraud and smuggling.

A pension reform aimed at achieving savings of 15 billion to 20 billion euros over the long term is planned, with details of the reform to be announced in the coming weeks.

A new funded private pension scheme based on individual and collective pension savings is also under consideration, with details likewise to be announced in the coming weeks.

Multinational corporations deemed to underpay French taxes would be taxed on the revenue they generate in France, using an average profit margin to calculate taxable profit.

Corporate production taxes would also be reduced by 20 billion euros.

The Dutreil tax regime, which provides inheritance tax exemptions for family-owned businesses, will be reinforced.

A corporate tax reform for small and medium-sized enterprises will be announced later.

A 150% super tax deduction will be introduced for automation, digitalisation, and productivity-enhancing investments carried out by small businesses and farmers.

To regain investor confidence, Le Pen said she would replace the tax on substantial real estate wealth with a financial wealth tax, setting the rate at 30%.

Business owners’ shareholdings in their companies would be excluded from the scope of the new financial wealth tax.

Energy taxes would be cut, including significant value-added tax reductions on energy and essential consumer goods.

Subsidies for wind and solar power, which Le Pen described as “harmful”, would be ended.

Pledging to regain national control over electricity generation and lower electricity bills, consideration is being given to a proposal to provide zero-interest loans for “cleaner” vehicles.

The plan targets an increase in public research spending equivalent to 0.3 percentage points of GDP by 2032.

Le Pen also aims to raise France’s total research and development spending to above 3% of GDP.

A system of “VAT collection at source” will be introduced, which Le Pen said would help combat an estimated 26 billion euros in VAT fraud.

Pledging to reform public procurement rules to curb monopolies and overpricing, plans also call for setting minimum fines for economic offences above the financial damage caused.

Le Pen also proposes state reform in her programme. These pledges include:

The abolition of “almost all” state agencies and related public bodies.

A significant simplification of local government structures and France’s overlapping administrative tiers.

The abolition of more than 120 taxes.

A reduction in public sector headcount by not replacing certain retiring staff.

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