European ‘wealth’ threatened by decline of region’s carmakers

{"text":[[{"start":6.583,"text":"Europe’s “wealth won’t last” unless it can salvage its auto industry and establish a beneficial relationship with Chinese carmakers opening factories in the region, said the head of one of the world’s top parts makers."}],[{"start":20.164,"text":"Francisco Riberas, chair and founder of Gestamp, told the FT the European car industry faced an existential crisis having been “asleep” while China stole a march in electric vehicles and the US threw up import barriers against Chinese cars."}],[{"start":34.849,"text":"“What Europe should really be worried about is losing the automotive industry,” said Riberas, speaking at the Madrid headquarters of Gestamp, whose 42,000 employees supply most of the world’s top carmakers from factories in 24 countries."}],[{"start":50.17,"text":"“The automotive industry is the anchor for many other industries — steel, aluminium, glass, the chemical industry and so on. So, losing the automotive industry could mean losing industry itself in Europe, and that would have far-reaching consequences.”"}],[{"start":null,"text":"

"}],[{"start":null,"text":""}],[{"start":63.868,"text":"The European auto industry is in a fight for survival as competition from more technologically advanced and cost-efficient China rivals such as BYD and SAIC Motor undercuts sales and forces thousands of job losses."}],[{"start":77.745,"text":"“Europe has to return to its original model from many years ago — the model that gave us the standard of living we enjoy today, which is the result of technology applied to the industrial revolution,” Riberas said. “That’s the model. Otherwise, we are just 5 per cent of the world’s population. We are wealthy, but our wealth won’t last.”"}],[{"start":98.96,"text":"Since 2017, when global auto output peaked, Europe’s production of vehicles — including those exported beyond the continent — has plunged by a dramatic 20-25 per cent, Riberas noted. The industry’s woes are particularly marked in Germany, the continent’s biggest car producer ahead of Spain."}],[{"start":116.32,"text":"As Chinese manufacturers erode the businesses of European rivals, the continent is locked in a debate over whether investments from those same companies — which are seeking to manufacture in Europe — represent salvation or a road to self-destruction."}],[{"start":130.227,"text":"Riberas said Chinese companies should be welcomed, albeit with caveats. “Ultimately, who makes the cars isn’t the most important thing. What’s important is that they’re made here and that they create jobs here. I think that’s something people sometimes forget.”"}],[{"start":null,"text":""}],[{"start":146.56,"text":"European automotive manufacturing accounts for about 7 per cent of the continent’s GDP and supports nearly 14mn jobs."}],[{"start":151.92,"text":"But Riberas said it was vital for Europe’s industrial future that Chinese makers turn to local suppliers for components rather than importing them from China and simply bolting them together on European soil."}],[{"start":163.893,"text":"For every job in a European car plant, there have traditionally been three jobs in European component manufacturing, he said."}],[{"start":171.36,"text":"Gestamp, which he founded in 1997, bills itself as a global leader in the production of metal components including car bodies, chassis and door hinges, some made via a hot stamping process that makes them ultra-resilient."}],[{"start":187.44,"text":"But he noted that Gestamp had “very few” contracts with Chinese carmakers in Europe."}],[{"start":189.789,"text":"“Among the cars being produced in Europe [by Chinese carmakers], most of the components are essentially being imported from China,” the Gestamp chair said. “What is still missing is the second phase, where they actually manufacture them here."}],[{"start":202.4,"text":"“If it turns out that all we’re doing is getting the cars assembled here while all the components come from China, we’ve destroyed the entire value chain.”"}],[{"start":null,"text":""}],[{"start":null,"text":""}],[{"start":210.08,"text":"China’s Chery assembles vehicles in Barcelona while Xpeng builds vehicles at contract manufacturer Magna Steyr’s plant in Austria. Leapmotor is planning to start production in Spain later this year. BYD plans to start mass producing its vehicles in Hungary by the end of this year."}],[{"start":227.24,"text":"Riberas also complained about the lack of a “level playing field” on financing with Chinese competitors. While the European auto sector is “not considered attractive to the financial world”, he said Chinese companies have access to abundant funding that means “they are often investing with a zero cost of capital in effect”. He called that “an advantage that cannot be tolerated”."}],[{"start":247.36,"text":"In response to worries about Chinese investments not generating local benefits, the European Union is creating a landmark law called the Industrial Accelerator Act. It will give member states the power to veto any Chinese FDI exceeding €100mn in certain strategic sectors. The act, which is yet to become law, also includes a proposed 70 per cent local content threshold for car components if investments are to qualify for subsidies or public contracts."}],[{"start":275.486,"text":"Beijing has lashed out at the act, accusing the EU of “engaging in protectionism”. The IAA does not, however, contain any stringent requirements for Chinese manufacturers to share their world-beating battery or EV technology with European partners — an area where critics of Chinese investment fear Europe is being left in the dark."}],[{"start":296.437,"text":"Chinese carmakers from BYD to Chery have all pledged to increase the use of European-made car parts as they expand sales across the continent and face pressure to meet the IAA’s proposed “Made in Europe” requirements."}],[{"start":null,"text":""}],[{"start":309.76,"text":"Western carmakers that have partnered with Chinese rivals to fill idle capacity at their European plants are also designing their joint ventures to encourage more use of European supply chains. They include a Stellantis tie-up with Dongfeng and a Ford partnership in Spain with Geely."}],[{"start":325.6,"text":"Still, the transition away from Chinese suppliers is expected to take time because they are significantly cheaper."}],[{"start":332.861,"text":"Gestamp has 13 factories in China, a number second only to its 22 in Spain, and supplies many Chinese producers, including Li Auto, Xiaomi Auto and Beijing Benz Automotive, a Mercedes-Benz joint venture."}],[{"start":347.271,"text":"Riberas was supportive of the IAA, which he described as “defensive” but necessary for Europe. “It’s not just about taking a protectionist approach. We also need to shield ourselves, to some extent, from situations that may not be fair, and buy ourselves some time,” he said."}],[{"start":363.51,"text":"“With each passing day, more companies are going under . . . And once that industrial base is lost, it won’t come back.”"}],[{"start":372.8,"text":"Gestamp recorded revenues of €12.4bn in 2023 but has posted two years of declines since then due to the struggles of many of its customers. Its revenue for 2025 came in at €11.5bn."}],[{"start":386.16,"text":"Beyond defensive measures, Riberas said that Europe, including its policymakers, needed a plan for its car industry — the kind of plan that China has had “for many years” and has been implementing single mindedly."}],[{"start":397.6,"text":"“That plan requires everyone to pull together and work hard — something we sometimes seem to forget,” Riberas said."}],[{"start":404.89,"text":"“It also requires investing heavily in technology and making the most of the wave of digitalisation and artificial intelligence to improve our competitiveness. We must also recognise that some of what we have today will no longer be competitive.”"}],[{"start":418.88,"text":"Additional reporting by Kana Inagaki in Tokyo"}],[{"start":426.32,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1788853608_8682.mp3"}