{"id":15901,"date":"2026-07-29T12:48:43","date_gmt":"2026-07-29T09:48:43","guid":{"rendered":""},"modified":"2026-07-29T12:48:43","modified_gmt":"2026-07-29T09:48:43","slug":"german-automakers-restructure-operations-as-chinese-rivals-capture-market-share","status":"publish","type":"post","link":"https:\/\/harici.com.tr\/en\/german-automakers-restructure-operations-as-chinese-rivals-capture-market-share\/","title":{"rendered":"German automakers restructure operations as Chinese rivals capture market share"},"content":{"rendered":"<p>The German automotive sector is facing an unprecedented level of restructuring pressure.<\/p>\n<p>As Chinese manufacturers establish dominance in the domestic market for electric and hybrid vehicles, German automakers are rapidly losing market share.<\/p>\n<p>In the first half of 2026, sales figures in China for BMW, Mercedes, and Volkswagen fell by more than a quarter.<\/p>\n<p>Volkswagen is undergoing the largest restructuring process in its history. Chief Executive Officer Oliver Blume is planning to halve the company\u2019s model lineup, reduce production capacity by approximately one million vehicles, and cut up to 100,000 jobs worldwide.<\/p>\n<p>Volkswagen is not limiting its strategy to radical cost-cutting measures alone. For the first time, the company is considering the possibility of introducing models developed specifically for the Chinese market to Europe, with a view toward manufacturing them in European plants over the long term.<\/p>\n<p>At the same time, other European manufacturers are relying increasingly on joint ventures established with Chinese companies.<\/p>\n<p>This marks the beginning of a new era: the driving force behind the modernization of the Chinese market is no longer European manufacturers; rather, China is shaping the future of the European automotive industry.<\/p>\n<p>Opel is planning an SUV project in which Chinese engineers will develop the powertrain and battery, while German engineers will handle only the design and seats.<\/p>\n<p><strong>German brands lose ground in the Chinese market<\/strong><\/p>\n<p>According to an analysis <span style=\"color: #0000ff;\"><a style=\"color: #0000ff;\" href=\"https:\/\/www.german-foreign-policy.com\/news\/detail\/10496\">published<\/a><\/span> by German Foreign Policy, the decline in sales for German automakers in the Chinese market is worsening.<\/p>\n<p>In the first half of 2026, sales for BMW, Mercedes, and VW plummeted by over 25%. BMW recorded a drop of nearly one-fifth, while VW and Mercedes fell by 26% and 28%, respectively.<\/p>\n<p>In the wake of the war in Iran, gasoline prices rose in China. This accelerated demand for electric and hybrid vehicles, dealing a negative blow to sales for German automakers, which continue to sell predominantly internal combustion engine vehicles in the country.<\/p>\n<p>Changes in tax regulations governing luxury automobiles are compounding the problem. The tax threshold for new vehicles (excluding VAT) was lowered from the previous level of 1.3 million yuan to 900,000 yuan (approximately \u20ac116,000).<\/p>\n<p>The German Association of the Automotive Industry (VDA) assesses that this situation will yield highly negative consequences for European manufacturers, particularly German producers.<\/p>\n<p>According to forecasts by the China Passenger Car Association (CPCA), demand for internal combustion engine vehicles has dropped significantly, especially in the price segment between 900,000 and 1.3 million yuan.<\/p>\n<p>Consumers purchasing luxury vehicles are increasingly turning instead to Chinese-origin electric or hybrid models.<\/p>\n<p>BMW, Mercedes, and VW have already been forced to significantly scale back their plug-in hybrid operations.<\/p>\n<p>Tax incentives targeting partially electrified powertrains now apply exclusively to vehicles capable of traveling at least 100 kilometers on electric power alone.<\/p>\n<p>This state of affairs is forcing a restructuring of model portfolios across German automakers.<\/p>\n<p><strong>Fewer models, fewer plants<\/strong><\/p>\n<p>VW CEO Oliver Blume intends to counter this trend.<\/p>\n<p>VW management plans to reduce its model lineup by up to 50%. Product and variant diversity will be cut by 75%.<\/p>\n<p>Furthermore, annual production capacity will be scaled down from the current 10 million vehicles to approximately 9 million. The vehicle model count, which currently stands at around 150, will be halved.<\/p>\n<p>This development primarily affects the internal combustion engine segment in China. In China, VW management has already closed or sold five plants, reducing local capacity by approximately one million vehicles.<\/p>\n<p>Over the long term, the company aims to return to annual sales of 10 million vehicles. Of the 1 million vehicles that VW plans to withdraw temporarily from the market, half are situated in European plants, specifically in Germany.<\/p>\n<p>The remaining half of the excess capacity remains in China, despite the closures executed to date.<\/p>\n<p>To shrink production capacity, the VW Group plans to eliminate up to 50,000 jobs globally. In Germany, the future of four plants is currently under review.<\/p>\n<p>These layoffs will take place in addition to the 50,000 job cuts already planned through 2030.<\/p>\n<p>Oliver Blume characterizes this as the largest transformation in the history of the VW Group: &#8220;This is not merely a cost-cutting package; it is the most comprehensive and far-reaching transformation package we have ever implemented at the Volkswagen Group.&#8221;<\/p>\n<p><strong>Plunging operating profits spur workforce cuts<\/strong><\/p>\n<p>VW management is consequently taking radical action to trim model counts, production capacity, and headcounts.<\/p>\n<p>At the same time, the Group is not abandoning its profit targets. In the first half of 2026, the group\u2019s operating profit dropped 11.6% to \u20ac5.93 billion.<\/p>\n<p>The operating margin fell to 3.8%, meaning VW generated only \u20ac3.80 in operating profit for every \u20ac100 in revenue.<\/p>\n<p>Chief Financial Officer Arno Antlitz called the results &#8220;another wake-up call to act.&#8221;<\/p>\n<p>The profit contribution from Chinese operations fell by one-third to \u20ac856 million.<\/p>\n<p>However, Blume views this not as a &#8220;Volkswagen crisis,&#8221; but rather as an &#8220;industry crisis.&#8221;<\/p>\n<p><strong>Alternatives: Defense production and China-specific models<\/strong><\/p>\n<p>Oliver Blume views potential plant closures in Emden, Zwickau, Hanover, and at Audi\u2019s Neckarsulm facility as a &#8220;last resort.&#8221;<\/p>\n<p>He also noted that utilizing these plants for defense industry manufacturing represents a distinct possibility.<\/p>\n<p>Another option involves producing China-specific VW models for the European market. This refers explicitly to VW models that have hitherto been sold exclusively in China, but it does not imply opening production to other manufacturers.<\/p>\n<p>Additionally, VW plans to increase exports from its Chinese factories to other markets, such as Australia, India, and Central Asian nations, in the future.<\/p>\n<p>The plan to bring its own China-specific models to Europe includes both the importation of finished vehicles and, at a later stage, the manufacturing of those vehicles or their components within Europe.<\/p>\n<p>According to internal sources, the VW plant in Zwickau is being evaluated as a prospective production site.<\/p>\n<p>VW already imports the Cupra Tavascan from China, a model belonging to Cupra, the Spanish brand owned by the VW Group.<\/p>\n<p>In Germany, the Tavascan ranks among the top ten best-selling electric cars, currently holding ninth position.<\/p>\n<p>Within the VW Group, it was decided that the motor for the planned \u20ac20,000 electric vehicle, the ID. EVERY1 model, will be imported from a VW component factory in China.<\/p>\n<p>Olaf Lies, the SPD Prime Minister of Lower Saxony, expressed openness to producing Chinese models in German VW plants following a trade trip to China.<\/p>\n<p><strong>European auto giants deepen partnerships with China<\/strong><\/p>\n<p>Other European car manufacturers are also seeking to offset falling capacity utilization by establishing joint ventures with Chinese producers.<\/p>\n<p>Stellantis plans to use four of its plants in Spain, France, and Italy to assemble models for the Chinese groups Leapmotor and Dongfeng.<\/p>\n<p>Stellantis brands\u2014including Opel, Jeep, Fiat, and Peugeot\u2014are currently utilizing only about half of their assembly capacity within the EU.<\/p>\n<p>In the future, Leapmotor models will be manufactured at Stellantis plants in Madrid and Zaragoza, Spain.<\/p>\n<p>Together with Dongfeng, the production of an electric car in Rennes, France, is under consideration.<\/p>\n<p>A small electric vehicle belonging to Leapmotor will be produced in Pomigliano, Italy.<\/p>\n<p>An Opel SUV model featuring Chinese technology will also be manufactured in Madrid.<\/p>\n<p>The powertrain, battery, and software will be sourced from Leapmotor. German engineers will remain responsible solely for design, seats, and the chassis.<\/p>\n<p><strong>EU sanctions against China risk worsening auto crisis<\/strong><\/p>\n<p>The VW Group\u2019s strategy to import vehicles developed entirely in China carries inherent risks.<\/p>\n<p>The EU imposes a baseline tariff of 10% on Chinese-made electric vehicles, alongside additional duties termed &#8220;countervailing&#8221; tariffs.<\/p>\n<p>These countervailing tariffs stand at 35% for SAIC (VW\u2019s Chinese joint-venture partner), 17% for BYD, and slightly under 8% for Tesla.<\/p>\n<p>However, countervailing tariffs affect German manufacturers as well. The Cupra Tavascan was initially subjected to a 20.7% tariff.<\/p>\n<p>Following extended negotiations, the European Commission dropped the additional duty for the VW Group model.<\/p>\n<p>In the US, Mercedes faces the threat of market exclusion due to proposed legislation.<\/p>\n<p>The proposed bill would ban the sale of connected vehicles if more than 15% of the manufacturer&#8217;s shares are owned by Chinese shareholders.<\/p>\n<p>Just under 20% of Mercedes\u2019 shares are currently held by Chinese investors.<\/p>\n<p><!-- notionvc: b2081088-5a5e-4218-92ec-e480f2e2ef77 --><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The German automotive sector is facing an unprecedented level of restructuring pressure. As Chinese manufacturers establish dominance in the domestic market for electric and hybrid vehicles, German automakers are rapidly losing market share. In the first half of 2026, sales figures in China for BMW, Mercedes, and Volkswagen fell by more than a quarter. Volkswagen [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":15902,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false,"footnotes":""},"categories":[3],"tags":[20733,7742,11021,2710,2756,529,20742,20736,20741,20735,2172,610,20738,20743,17039,543,503,4134,20737,17030,5488,20740,13073,13839,20734,2712,20732,20739,5482,5487,6149,821,2709,19004],"class_list":["post-15901","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-europe","tag-arno-antlitz","tag-automotive-industry","tag-automotive-tariffs","tag-bmw","tag-byd","tag-china","tag-connected-vehicles","tag-cupra-tavascan","tag-defense-industry-manufacturing","tag-dongfeng","tag-electric-vehicles","tag-eu","tag-factory-closures","tag-foreign-investment-limits","tag-fuel-prices","tag-germany","tag-headline","tag-hybrid-vehicles","tag-id-every1","tag-iran-war","tag-leapmotor","tag-luxury-car-tax","tag-market-share","tag-mercedes","tag-olaf-lies","tag-oliver-blume","tag-opel","tag-operating-profit","tag-saic","tag-stellantis","tag-supply-chain","tag-us","tag-volkswagen","tag-workforce-reductions"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.7 - 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