China hits back at Commission’s proposed additional tariffs of up to 38.1% on net Chinese production electric cars can create problems in Europe automotive industries Reuters reports.
German carmakers depend on China for nearly a third of their sales by 2023. European auto industry leaders have warned the EU about the tariffs, fearing counter-tariffs or other measures that could affect the competitiveness of their cars in China at a time when they already face intense competition from domestic companies growing in the electric car market.
German automakers are more exposed to possible countermeasures, with trade data showing that nearly a third of their sales in 2023 will come from China. And while most cars sold in China are produced locally, many top models are still imported from Germany, Automotive News Europe notes.
The most exposed is Porsche, which is majority owned by the Volkswagen group. It has no production in China and imports all the cars it sells there, which is equal to 25% of its global sales.
Less than 5 percent of the 4.8 million vehicles supplied to Chinese buyers by VDA, Porsche, BMW and Mercedes-Benz were exported in 2023, according to data from the VDA automotive association.
Reports suggest that the countermeasure coming from China will include cars with engines of 2.5 liters or larger.
Cars of this size imported into China account for about 1 percent of VW sales, 2 percent for BMW, 4 percent for Mercedes and 17 percent for Porsche, according to Stifel Research.
However, because exported cars tend to be higher-end models with significant profit margins, Stifel Research estimates the negative impact on German automakers’ operating profit would be between 4 percent and 10 percent.
Porsche cars are mostly produced in Germany, and 25% of the company’s sales are made in China. Deliveries in China fell 15% to 79,283 vehicles last year and are set to fall 24% in the first quarter of 2024, partly due to the country’s tough economic situation.
China is Mercedes-Benz’s largest market for new car sales, accounting for around 36% of its sales, which is just over 737,000 units in 2023. Porsche Cayenne, according to China Merchants Bank International. Mercedes imports top models from Europe and the US to China, such as the S-Class, GLC, G-Class and Maybach.
BMW’s Chinese cars are produced by joint ventures, including China’s Brilliance, in which it owns a 75% stake, and a second joint venture with Great Wall.
Both these joint ventures manufacture vehicles for export to Europe. The iX3 and MINI are subject to European Commission tariffs.
Swedish carmaker Volvo, which is majority-owned by China’s Geely, generates a quarter of its sales in China, HSBC analysts said.
Franco-Italian Stellantis has one of the lowest regional exposures in China, except for its recent investment in Chinese electric car company Leapmotor, with which it plans to export two EV models from China by the end of the year.