Study shows German autos under threat from China imports

Germany saw a 75% jump in imports of vehicles and vehicle parts from China, whereas trade in the opposite direction declined, highlighting the growing challenges faced by Europe’s largest automotive manufacturing hub.

According to a report by the German Economic Institute (IW), multiple Chinese automotive brands have made their entry into the German market this year, bringing the total to eight. However, it’s worth noting that these brands still constitute only a 1.5% share of the vehicles sold in the country.

The release of this study comes just days after the European Commission announced the launch of an investigation to determine whether imposing punitive tariffs is necessary to safeguard European Union (EU) producers from the influx of cheaper Chinese electric vehicle imports, which the EU says benefits from state subsidies.

The study also revealed a 21% drop in German vehicle and parts exports to the world’s second-largest economy during the first half of the year. This decline accounted for a substantial three-quarters of the overall decrease in exports to China, which exceeded 8%.

“The business model that used to support car production in Germany – the intercontinental export of high-quality vehicles – is coming under increasing pressure,” authors Juergen Matthes and Thomas Puls wrote in the study.

“German manufacturers have been relocating more and more production to China for years, currently also increasingly in the previously resistant premium class,” they added.

Germany, at times seen as a “weak link” in Western attempts to decouple from China, has over the past year joined the broader push to reduce dependence on China.

The IW study, titled “Is Derisking Beginning?” suggests that a closer examination of the overall 17% decline in German imports from China during the first half of the year reveals the initial indications of Germany gradually reducing its dependency on China.