As falling sales in China hit Volkswagen and BMW’s second-quarter profits, German carmakers warned of a looming trade war between the EU and the world’s biggest car market.
BMW chief executive Oliver Zipse said on Thursday that the EU’s imposition of tariffs on Chinese-made electric vehicles last month had hit the bloc’s own carmakers, including the Munich-based group, which makes vehicles in China for the European market, the Financial Times (FT) reported.
Zipse warned that “countermeasures” were expected, adding that Europe’s green transformation “relies heavily on raw materials and technology from China”.
Beijing is open to compromise, says Volkswagen boss
The tariffs on Chinese-made cars were imposed after a Brussels investigation found evidence that China’s booming electric vehicle (EV) sector was being heavily subsidised by Beijing. The measure is temporary, pending a vote by EU member states in November.
VW chief executive Oliver Blume said that although China’s commerce ministry had called the move “illegal” after the EU announced its decision in June, when he met Chinese ministers two weeks ago they were open to discussing tariffs and “seeking a fair solution”.
Blume said she was personally “deeply interested” in the issue, adding that she was “in contact with different countries in the EU” ahead of the vote. In opposing EU tariffs, Blume acknowledged that China currently imposes a 15% tariff on European electric vehicles and said she expected “the same deal” from China in return.
Sales of German cars falling
VW employs around 90,000 people in China and has invested more than €10 billion in the past four years. China has long been the most important market for German carmakers, but increasing competition from domestic electric vehicle brands such as BYD has put traditional carmakers under pressure and led to a price war.
VW’s deliveries to Chinese customers fell to 651,500 in the second quarter, down more than 19 per cent on the same period last year. Combined with unexpected costs related to a major restructuring programme, pre-tax profit at Europe’s biggest carmaker fell 8.4 per cent to just under 5 billion euros.
BMW, which is outpacing its German rivals in electric vehicle sales, saw deliveries in China fall by almost 5% to just over 188,500 vehicles in the same period, while the Munich-based company reported a net profit drop of almost 9% to 2.7 billion euros.
