Struggling European carmakers have options, none of them good

{"text":[[{"start":4.2,"text":"Sometimes, a new competitor emerges that blows traditional rivals out of the water. TV makers like Philips and Grundig found they could not compete with South Korea’s LG and Samsung; European shipbuilders lost their dominance to Asian counterparts. Carmakers Volkswagen, Stellantis, BMW and peers urgently need to figure out how to avoid the same fate. "}],[{"start":28.3,"text":"The key problem, for European automotive companies, is China. Its electric-vehicle manufacturers — companies such as BYD, Nio and Leapmotor — sell cars that are 20 to 50 per cent cheaper than western alternatives, according to McKinsey analysis. Having run rings around the Europeans in China, companies from the People’s Republic are now gaining ground abroad too."}],[{"start":null,"text":"

"}],[{"start":50.05,"text":"With all but the very top end of the car market now commoditised, it is hard to imagine this trend reversing. The best that domestic carmakers can hope for is that the European Union, which is waking up to their howls of angst, will protect them from Chinese competitors for some time at least, giving them time to adapt. "}],[{"start":68,"text":"But whichever way one cuts it, adapting will be painful. Most carmakers are, to varying extents, attempting to close manufacturing capacity and cut costs. When BMW issued its giant profit warning last week, for instance, it said it would wield the axe to counter the pressures on the auto industry. But, with their market share continuing to decline, this is a never-ending process. And planned cuts and closures tend to hit roadblocks from local politicians and trade unions. "}],[{"start":98.75,"text":"A more appealing option is to use existing plants and skillsets for more profitable activities. Renault, Volkswagen and Mercedes-Benz are among those who have partnered with defence companies to build military vehicles, along with missiles and anti-drone defences, while suppliers such as Germany’s Bosch hope to sell components such as sensors to robotics firms. That’s helpful but, given the scale of the overcapacity, it is unlikely to be enough."}],[{"start":128.75,"text":"What about trying to turn enemies into friends? While it’s unlikely a European carmaker would want to merge with a Chinese peer, let alone be allowed to do so, there’s room to strike any number of deals. Chinese manufacturers are keen to secure capacity in European plants ahead of expected EU “local content” rules. And in return they can offer access to their technology and supply chain. Stellantis and Leapmotor have already gone down this route, while Volkswagen is thinking about it. "}],[{"start":159.75,"text":"Offering China market access in exchange for its technology will, in the long run, only make its carmakers stronger. The risk is that at some point, European carmakers will get hemmed into a corner. Still, forging alliances would help the struggling sector offload some of its bloated costs, and learn something new in the process. It may be the pick of a bad bunch. "}],[{"start":187.65,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1782279757_4083.mp3"}