The Confinement Of The European Automotive Industry Between Trump Tariffs And Chinese Car Raids

The latest BMW iX3 50 xDrive car. (Photo: BMW)

JAKARTA The IAA Mobility car exhibition in Munich this year is a tense stage for European automotive manufacturers. They not only showcased the latest models, but also faced "perfect storm" that threatened their dominance: tariff pressures from the United States, soaring electrification costs, and intense competition from China's aggressive manufacturers into the European market.

Citing a Reuters report on Monday, September 8, instead of simply showing new cars, leaders of major companies such as Volkswagen, BMW, and Mercedes-Benz are taking advantage of this event to lobby for the European Union to reconsider its ambitious policies, namely a ban on the sale of internal combustion engine cars by 2035. In fact, BMW CEO Oliver Zipse, publicly called the ban a "big mistake" and suggested more holistic emission regulations.

However, the biggest challenge comes from the East. Chinese manufacturers such as BYD, Changan, and GAC massively flooded the European market with competitive models, both in terms of price and technology. According to data from JATO Dynamics, the share of the Chinese brand market in Europe has almost doubled to 4.8 percent as of July this year compared to the same period in 2024.

This condition is exacerbated by the weakening sales of European cars in China, the largest single market for many leading brands. For example, Porsche felt the worst impact, with a 28 percent decline in sales in China in the first half of this year. This decline even caused Porsche to be kicked out of Germany's blue-chip stock index, a crushing blow that marked the end of a smooth sales era in the market.

On the other hand of the Atlantic, US President Donald Trump's decision to impose a 15% tariff on European-made cars is also a scourge. Although the trade deal was reached in July, this tariff has the potential to force European manufacturers not to sell less favorable models in the US market.

Industry experts see this situation as a result of the "demand" of European manufacturers. Phil Dunne of Stax said that after years of complacency, now "the Chinese are here to live." This situation forced the European automotive giants to adapt quickly if they wanted to maintain their position in the global arena.