Will the trouble ever end for Volkswagen and its rivals?
Subscribe to enjoy similar stories. Car dashboards have an array of indicators that illuminate to warn of trouble. If the boardrooms of Europe’s carmakers had similar systems they would be lit up like a Christmas market.
Volkswagen (VW), the largest of the lot by sales, is bracing for strikes beginning on December 1st in response to its plan to close three factories in Germany and cut wages. Northvolt, a once-promising Swedish battery startup in which VW and BMW invested, has collapsed into bankruptcy. Meanwhile, across the Atlantic, Donald Trump is threatening to upend supply chains by imposing a 25% tariff on imports from Mexico and Canada.
These troubles come amid an already difficult year for Europe’s auto industry. Since April the combined market value of the continent’s five biggest carmakers by sales—VW, Stellantis, Renault, BMW and Mercedes—has plunged from more than €300bn ($320bn) to below €200bn, as a string of gloomy profit forecasts has spooked investors (see chart). In Europe demand has shrunk and competition is intensifying from Chinese electric-vehicle (EV) firms.
“The pie has become smaller, and we have more guests at the table," Oliver Blume, vw’s boss, has said. At the same time, the overseas businesses of European carmakers have hit a pothole. Sales in China have slumped, and profits in America are under threat, too.
Philippe Houchois of Jefferies, a bank, describes it as “a downturn like no other". Yet efforts to slash costs at home to stay competitive are hitting stiff resistance from unions and politicians. Not long ago European carmakers were on a tear.
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