Paris motor show taken by sorm by chinese cars

A record 20 Chinese car brands will participate in next week's Paris Motor Show, twice as many as at the previous edition in 2024, at a time when Chinese manufacturers are rapidly strengthening their presence in the European market despite trade barriers introduced by the European Union, according to Reuters.

The event will bring together established Chinese manufacturers such as BYD and Chery, as well as brands less familiar in international markets, including Aito and Avatr. At the same time, European manufacturers will seek to reaffirm their competitiveness by launching new models, particularly electric vehicles, and convince investors that they can withstand increasingly strong competition from Asian companies.

The Paris Motor Show comes at a difficult time for the European automotive industry, which is affected by weak demand in its domestic market, U.S. trade tariffs, the high costs of electrification and declining market share in China. Sales by European manufacturers in the Chinese market have fallen significantly since the COVID-19 pandemic, while local manufacturers have accelerated their international expansion.

With access to the U.S. market heavily restricted and domestic demand in China showing signs of weakness, Europe has become one of the main destinations for Chinese automotive exports.

"The Chinese believe they have to try to dominate Europe because they cannot do anything in the United States. If the Americans had allowed Chinese carmakers to enter their market, Europe would not have become such an important battleground," explained Brad Kunz, a partner at consulting firm Grant Thornton Stax.

According to data from Schmidt Automotive Research, Chinese brands have come to control 10.7% of the European automotive market in the second quarter, almost double the 5.7% share recorded in the same period last year. Chinese manufacturers have thus surpassed Japanese brands in terms of market share, after the latter began their European expansion in the 1970s.

• European Carmakers Caught Between Competition and Cooperation with Chinese Manufacturers

Pressure from Chinese manufacturers adds to the structural difficulties facing the European automotive industry. Weak demand, the investments required for the transition to electric mobility and trade barriers imposed by the United States are forcing major groups to revise their industrial strategies.

Volkswagen has launched an extensive cost-cutting program that includes eliminating thousands of jobs and considering the possibility of closing some factories. BMW, one of Europe's leading premium car manufacturers, is also reducing its workforce by several thousand employees.

The European Union introduced additional tariffs on fully electric cars manufactured in China two years ago, but Chinese manufacturers have rapidly adapted their commercial strategies, expanding their range of vehicles with internal combustion engines and plug-in hybrid models, which are not subject to the same measures.

This shift has contributed to the spectacular growth of Chinese brands in the plug-in hybrid segment. In the second quarter, Chinese brands accounted for more than 26% of the plug-in hybrid vehicle market in Western Europe, compared with just 2.2% in the same period two years earlier.

Against this backdrop, the European automotive industry is calling for trade tariffs to be extended to plug-in hybrid cars imported from China. At the same time, the European Commission is preparing regulations that include "Made in Europe" provisions, under which access to certain subsidies and public contracts for electric vehicles would be conditional on the use of a minimum level of locally produced components.

Nevertheless, the relationship between European and Chinese carmakers is not limited to competition for customers.

Several European groups are seeking to capitalize on the expansion of Chinese companies by making underutilized production capacity available and establishing technological partnerships, particularly in the field of electric mobility.

One example is Stellantis, which is collaborating with Chinese state-controlled carmaker Dongfeng.

"Europeans are, in a way, playing a double game," said Pedro Pacheco, vice president of research at Gartner, referring to the strategy of manufacturers that compete with Chinese brands while simultaneously seeking to benefit from their technologies and investments.

• European Manufacturers Prepare More Affordable Electric Models

Although Chinese manufacturers have gained a significant competitive advantage in electric vehicle technologies, European companies are seeking to regain lost ground by developing a new generation of lower-priced electric cars.

The Paris Motor Show is seen as an opportunity for European manufacturers to showcase the results of these investments and demonstrate that they can defend their market positions.

"This will probably be the most important motor show in the region since the pandemic. It is the platform through which Europeans want to send a message to the Chinese that they remain strong and ready to compete," automotive analyst Felipe Munoz said, according to Reuters.

Among the major European launches is Stellantis' revival of the Citroën 2CV model. The new car will serve as a test for regulations allowing manufacturers to eliminate certain features in order to reduce production costs and develop more affordable electric vehicles.

The initiative is part of the European industry's efforts to counter the price advantage of Chinese brands, which have managed to expand their offerings across several market segments.

At the same time, Chinese manufacturers that are less well known in Europe will seek to use the event to accelerate their international expansion.

Aito, the premium brand owned by Chongqing-based Seres Group, intends to unveil four electric SUVs in Paris aimed at the European market.

The company has set a target for international sales to account for 20% of its total volume over the next three years, compared with less than 1% at present.

• Chinese Competition Revives Interest in Major Motor Shows

The large number of Chinese manufacturers participating is also helping to revitalize international motor shows, events that have lost some of their appeal in recent years amid the withdrawal of certain traditional manufacturers and their shift toward individual product launches.

Francois Roudier, secretary general of the International Organization of Motor Vehicle Manufacturers, believes that the arrival of new Chinese brands has brought competition back to the center of these events and increased interest in public presentations of new models.

According to him, the record presence of manufacturers in Paris reflects intensifying competition for buyers in an increasingly crowded European market, where carmakers must make additional efforts to sell their vehicles.

"For years, people bought cars. Now, manufacturers have to sell them," Roudier said, arguing that companies that decided not to participate in the show had made a mistake.

In his view, participation in major automotive events is once again becoming an important commercial tool in an industry where simply being present in the market no longer guarantees success.

The Paris Motor Show is thus emerging as a new battleground between the European automotive industry, which is undergoing a costly process of restructuring and electrification, and Chinese manufacturers seeking to transform their technological and industrial advantages into an increasingly strong commercial presence on the continent.