The global automotive market is poised for further intensification, according to Ralf Brandstätter, Head of Volkswagen China, who recently voiced concerns in an interview with the Süddeutsche Zeitung. He anticipates increasing price competition worldwide, particularly in Europe.
Brandstätter highlighted the Chinese market as a key driver of this pressure, describing it as “overheated” with over 100 brands vying for market share. This intense competition has triggered substantial price reductions, negatively impacting the broader automotive industry. He stated that many Chinese manufacturers are prioritizing aggressive discounting over investments in sustainable growth and technological advancements. Volkswagen, he explained, made a deliberate decision early on to avoid participating in this price war. Despite this stance, the company reiterated its commitment to maintaining a significant presence in the competitive Chinese market, aiming for continued profitability, albeit at a more moderate level than previously experienced.
Addressing Europe’s growing dependency on Chinese battery cells, Brandstätter underscored the need for urgent action within the automotive sector. He advocated for a comprehensive, industry-wide political strategy encompassing the security of raw material supply chains.
Brandstätter further suggested a reciprocal approach for Chinese automotive manufacturers operating in Europe. He argued that companies seeking to avoid tariffs should contribute a significant portion of their value chain within Europe, fostering local competition. This includes the establishment of battery cell production facilities, beyond simple vehicle assembly. He drew a parallel to Volkswagen’s own practice in China, where establishing a production facility necessitates adhering to similar stipulations to secure operational licenses.
