Chinese and European automakers face off at Paris car show (updated)

Seres Therapeutics

14/10/2024 10:52

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      Chinese brands including BYD, Leapmotor to unveil new
models
    

        * 
      European automakers out in force to defend home turf
    

        * 
      EU planning tariffs on Chinese-made EVs amid weak market
    

        * 
      GAC says show marks launch of its European expansion
    

  
 (Adds Leapmotor in paragraph 8, Stellantis in 19-21)
    By Nick Carey
       PARIS, Oct 14 (Reuters) - Chinese and European
automakers are going head-to-head at the Paris car show on
Monday, with tensions running high as the EU gears up to impose
hefty import tariffs on Chinese-made electric vehicles and the
industry struggles with weak demand.
    This year's event - the largest car show in Europe - comes
at a pivotal time. Struggling European automakers need to prove
they are still in the game, while Chinese rivals are aiming to
get a foothold in a competitive market.
    "This is China versus Europe and this is the ring they've
chosen to fight in," said Phil Dunne, a managing director at
strategy consultancy Stax. "The Europeans are saying this is our
territory and the Chinese are coming to stake their claim."
    Nine Chinese brands including BYD  002594.SZ  and Leapmotor
are unveiling their latest models at this year's event,
according to Paris auto show CEO Serge Gachot. That is the same
as in 2022 when they made up almost half the brands present.
    This year, they will only account for about a fifth of the
brands thanks to a much stronger showing from Europe's auto
industry - a sign of its determination to defend its home turf. 
    Earlier this month, EU member states narrowly backed import
duties on Chinese-made EVs of up to 45%, meant to counter what
the European Commission says are unfair subsidies from Beijing
to Chinese manufacturers. Beijing denies unfair competition and
has threatened counter-measures.  
    While Chinese automakers have criticised the EU's move, they
are pressing ahead with European expansion plans and so far none
has said it will raise prices to cover the duties.
    China's GAC  601238.SS  told Reuters on Sunday that the show
marked the launch of its European ambitions, while compatriot
Leapmotor  9863.HK  said on Monday it aimed to have 500 points
of sale in Europe by the end of 2025.
    Chinese EV makers like BYD have so far priced their vehicles
slightly below their European rivals, giving them an advantage.
That will also help offset lower margins at home. Like Japanese
and South Korean automakers before them, they are also touting
better equipment and offering more features as standard. 
    Yet even BYD, which already sells EVs across much of Europe
and sponsored the European soccer championships this summer,
still has relatively low brand recognition, so will hope to make
a splash with the electric Sea Lion 07 SUV it is due to launch.
    Newer Chinese entrants like Dongfeng  0489.HK , Seres
 601127.SS  and FAW  000800.SZ  will also be showing off new
models as they seek overseas EV sales to offset a weak home
market and a vicious price war there.
        China's passenger vehicle sales rose 4.3% in September
from a year ago, snapping five months of decline with a boost
from a government subsidy to encourage trade-ins as part of a
broader stimulus package. Europe's sales hit a three-year low in
August.
    In another blow for the EV market, the French government
said on Thursday it would reduce its support for EV buyers,
joining Germany which ended its subsidy scheme late last year.
    
  
    
    'ALARM BELLS'
    Chinese automakers also need to do well in Europe because
they have been shut out of the U.S. market.
    The Biden administration has imposed a 100% tariff on
Chinese-made EVs and last month proposed banning key Chinese
software and hardware in connected vehicles.
    Europe's automakers, meanwhile, have hit a rough patch, with
Volkswagen  VOWG_p.DE , Mercedes-Benz  MBGn.DE  and BMW
 BMWG.DE  all issuing profit warnings largely because of the
weak Chinese market. Stellantis  STLAM.MI  slashed its earnings
forecast because of inventory problems at its U.S. business.
    Stellantis CEO Carlos Tavares on Monday declined to rule out
job cuts or offloading brands in a challenging market. 
        "We will need to make big efforts", he told French radio
station RTL, adding it was up to customers to decide which
brands had a future.
  
        "It's the clients, not me, but there is no taboo."
  
    Volkswagen is also locked in a battle with powerful unions
over cost cuts that could see it close German factories for the
first time and cut thousands of jobs.
    The Europeans are struggling to compete with Chinese rivals'
lower costs and their ability to develop new EVs in just two
years, at least twice as fast as traditional Western automakers.
    "The Europeans have massive alarm bells ringing," Stax's
Dunne said. "They have recognised they need to do something
pretty radical and they only have a couple of years to do it."  
   
        
    
    

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
BEV registrations slowing down in the EU    https://reut.rs/4gt5PBw
Falling car sales in Europe    https://reut.rs/3XWVIwy
EV exports from China to European countries    https://reut.rs/47fXVr8
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Nick Carey; 
Additional reporting by Gilles Guillaume;
Editing by Josephine Mason and Mark Potter)
 ((nick.carey@thomsonreuters.com; +44 7385 414 954;))