BMW sounds the alarm as China squeezes Europe’s carmakers

{"text":[[{"start":5.95,"text":"There are profit warnings, and then there are existential howls. BMW added on Tuesday to the woeful din emanating from the European car industry, lopping about 60 per cent off the forecast operating profit for its car business for this year, mainly as a result of its struggles in China. "}],[{"start":23.95,"text":"Europe’s automakers have progressively been squeezed out of the Chinese market: cheaper, domestically produced electric vehicles have been gaining share at the expense of the premium traditional cars in which companies like BMW, Mercedes-Benz, Volkswagen and Stellantis specialise. "}],[{"start":40.55,"text":"As a result, sales have been crushed. Porsche’s revenue from China, for instance, fell by roughly two-thirds between 2022 and 2025, according to S&P Capital IQ. And the Chinese profit pool — which in peak years accounted for about half of the operating profit at BMW and Mercedes-Benz, according to Citigroup analysts — has shrunk to a puddle, or dried up completely. VW’s operating profit from its Chinese joint ventures almost halved last year, to €958mn."}],[{"start":null,"text":"

"}],[{"start":72.9,"text":"Worse, the Chinese market is itself now shrinking, as the economy splutters and subsidies are phased out. With electric vehicles continuing to gain share, that further squeezes European carmakers. It also leaves their Chinese rivals with lots of spare capacity to export their cheap EVs abroad. "}],[{"start":92.65,"text":"That’s where things go from extremely uncomfortable to actually threatening for the likes of Stellantis, Renault, VW and BMW. Chinese manufacturers have grown their market share in Europe from virtually nothing in 2021 to just shy of 10 per cent, reckon Jefferies’ analysts. European carmakers’ sales may have revived a bit this year, thanks to a slew of new, lower-priced models. But the region is far from a growth market, and cannot accommodate aggressive new entrants without shrinking locals’ sales. "}],[{"start":124,"text":"That’s really bad news for an industry that only makes use of about 70 per cent of its production capacity, by S&P Global’s reckoning, meaning it already bears outsize costs compared with its sales. European carmakers are meanwhile putting additional money into their plants to produce electric vehicles: making a decent return on all this new capital is going to get progressively harder, and every bump in the road — from US tariffs to disruption in the Middle East — will result in a nasty jolt."}],[{"start":154.1,"text":"Unsurprisingly, the European Union is considering protecting its domestic industry with “Made in Europe” rules for public procurement and access to subsidies. That, at least, would safeguard European parts suppliers and jobs. Sniffing the wind too, European carmakers have tentatively started to co-operate with their Chinese rivals: witness Stellantis’ discussions with Dongfeng over use of its spare capacity in France. It is still an uphill road if ever there was one. "}],[{"start":189.15,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1781765180_9963.mp3"}