China remained Germany’s leading trading partner for the eighth consecutive year in 2023, narrowly ahead of the United States. But against a backdrop of economic slowdown in both countries, the first quarter of 2024 marked an inflection point: imports from the Asian giant fell by 11.7% year-on-year, relegating the country to the rank of Berlin’s second largest trading partner. the first three months of the year.
For 61% of companies surveyed by the German Chamber of Commerce, the “ price pressure » is by far the biggest difficulty. Weak demand (51%), linked to the slowdown of the world’s second largest economy, and geopolitical tensions (37%) follow at the top of the concerns, according to the Chamber, which surveyed 186 companies. Car manufacturers represent 21% of respondents.
A price war to the detriment of profitability
German manufacturers therefore find themselves strongly impacted by the economic situation in their country and in China. The economic slowdown, which is weighing on consumer spending, has led in recent months to a price war between manufacturers to the detriment of their profitability.
There ” price pressure ” East ” of course the result of overcapacity, but our companies are aware that they can only survive this period if they become more competitive », Estimated Maximilian Butek, an official of the German Chamber, during a presentation on Friday.
Foreign manufacturers, who are struggling to adapt to the rapid electrification of the automobile fleet in China, are now threatened on their territory by Chinese vehicles. European imports of Chinese electric vehicles jumped from 57,000 in 2020 to 437,000 in 2023, according to the American Peterson Institute for International Economics.
As a reminder, China is the world’s largest automobile market and the most advanced in electric vehicles. Dozens of innovative local brands have emerged there in recent years, notably through purchasing subsidies. The undisputed leader in China is BYD. In 2023, it posted a record profit and announced its desire to enter the top five automotive groups in Europe. In March, it became the first to pass the symbolic mark of seven million vehicles produced (combined hybrid and electric) since its entry into this niche.
Electric cars: Europe threatens to sharply increase customs duties (+38%) on imported Chinese models
Customs duties imposed on China by the EU do not excite Germany
The European Commission said on Wednesday that it wanted to impose additional customs duties of 17.4% on BYD, 20% on Geely and 38.1% on SAIC from July 4, after nearly nine months of investigation. Beijing also threatened to file a complaint with the World Trade Organization (WTO) following this announcement. Germany is reserved about these measures, fearing reprisals for its automobile giants. “ EU’s proposed tariffs will not increase competitiveness » estimates Maximilian Butek. “ We therefore prefer to invest in competitiveness (…) rather than trying to protect the automobile industry “, insists the manager, noting that German manufacturers are “ dependent » from the Chinese market.
It is in this context that the visit of the German Minister of the Economy, Robert Habeck. This government heavyweight, from the Green party, “ will not be able to avoid broaching the subject » EU taxes on Chinese electric vehicles, but it “ does not speak or negotiate on behalf of the European Commission, it is the European Commission itself that does so » underlined a spokesperson for the Minister of the Economy. The ministry said this week that it was banking on dialogue between Beijing and Brussels to find common ground on the conditions for fair competition in electric cars. “ The European Commission itself has clearly expressed its interest in finding a solution with the Chinese government. We of course support these discussions », repeated the German Ministry of the Economy.
(With AFP)
