How China is going to eat up Europe’s auto industry after the coronavirus

The coronavirus pandemic has created a great health and social alarm and an economic crisis that will be a long time before it can be solved.

Polestar (Volvo’s sub-brand) manufacturing plant in Chengdu, China

The coronavirus pandemic has created a great health and social alarm and an economic crisis that will be a long time before it can be solved. At this moment nobody knows how the economy is going to evolve worldwide. For now, the only fight is to stop the health emergency that is costing thousands of human lives. The automobile sector is no stranger to this situation. Factories are closed almost everywhere, except the Chinese, and chaos has begun to take over both industry and distribution .


I am not going to talk to you much about coronaviruses, but I am going to try to analyze where the European and world automobile industry is going to evolve. I am not in favor of those conspiracy theories in which behind any strange situation, such as that of this pandemic, some government is positioned. That China has created the coronavirus just to dominate the world, I refuse to think that is true. But what is certain is that the great beneficiary of this emergency situation will be China.

The car factories around the world are already shuttering except China, which are beginning to take back its production rate. And they will be able to take advantage of these months until the situation clears up in the rest of the world, an advantage that will be insurmountable. The European Union, which along with the North American was the driving force behind the automobile industry, continues to lose steam year after year. And the big European manufacturers already have their factories set up in the United States and China.

BMW plant Shenyang city, Liaoning, China

Meanwhile, the European Union seems ready to put more and more complications on the automobile sector, which is the only strong industrial sector that Europe still has left. Brussels has been wanted to demonstrate that Europe is a standard bearer of the fight against climate change . And for this, brutal limits have been imposed on polluting emissions from cars, which are nowhere else in the world.

Climate change
The curious thing is that the same European Union, so active in the fight against climate change, continues to support burning coal to produce electricity, and all because Germany and Poland have coal and have to sell it. Everything in Europe works on the basis of lobbies, on the interests of the strongest countries and on the basis of the thousands of officials of the eight European organizations installed in Brussels or Strasbourg.

EU CO2 emissions are in decline overall, but saw marginal rise in last 3 years – Data-source: JATO Dynamics

But nobody thinks about an important sector such as the automobile. It is so because the car industry currently maintains 20 million jobs in the EU and because it is a real engine for the billions of euros that European manufacturers invest in technology and R&D every year.

In a few years we will see how Audi, BMW, Mercedes, Volkswagen and Volvo continue to relocate their factories, they manufacture more and more cars outside Europe. Even if the rules are still as demanding, much more than the Chinese, Japanese or American, it is not ruled out that they stop selling cars in Europe. And the Europeans will end up buying Chinese cars, which supposedly pollute very little, but which have “special approvals”. Meanwhile, South Korea will continue to support its automotive industry, as do the governments of Japan, China, or the United States.


Europe that each time a major problem arises fails to reach an agreement because it is about 27 countries adopting a common policy and that is almost impossible given the great differences between the countries. And also because the European Union is a cluster of entities that do not even end up agreeing among themselves.

8 entities
The European Commission, the European Parliament, the Council of Europe, the Council of the European Union, the Court of Justice of the European Union, the European Central Bank, the European Court of Auditors and the European External Action Service. Each one has its specific functions, but in many cases they overlap and in the end it is not only that the countries do not agree when implementing a measure, but they must start by agreeing on which is the competent body to make that decision.

The best examples are the immigration crisis of 2015, which still does not have a consensual solution, so each country makes its own decisions. And now with the coronavirus the same situation is being created again with the Eurobonds that some, the most indebted countries, want and the least indebted ones refuse to accept.

But curiously, the only thing that the 27 and the eight European official bodies agreed from the first moment was to impose draconian regulations on the auto industry. Or before, to impose a brutal bet on diesel cars in the eighties, or to impose maximum speed of 90 km/h, which were shown to be absurd.

Audi A3 plant in Foshan, China

Be careful because Audi, BMW, Mercedes, Volvo and Volkswagen, among other major automobile brands, continue to manufacture cars for the moment in Europe, but they also do so in the United States and China . All these brands have stopped their European and North American plants, but those in China are already operating.

Contact the author: darrinvaughn@wheelsjoint.com


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Issac WellsSimon Recent comment authors
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Simon
Simon

Is Brexit better understood now? The bureaucracy is killing Europe.

Issac Wells
Issac Wells

Anyone who thinks European consumers will buy the rubbish Chinese cars needs to be slacked around the head. Between Human Rights and Environmental problems, it is a non-starter.