Finance
European automakers confront tariffs, Chinese rivalry at Munich car show
Published by Global Banking and Finance Review
Posted on September 8, 2025
3 min readLast updated: January 22, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on September 8, 2025
3 min readLast updated: January 22, 2026
European automakers at Munich car show face US tariffs and growing Chinese competition, impacting sales and regulations.
By Nick Carey, Christoph Steitz and Christina Amann
MUNICH (Reuters) -Major automakers will showcase their latest models at Munich's car show on Monday as Europe's automotive sector faces crises ranging from U.S. tariff hikes to costly electrification and the expansion of Chinese automakers on their home turf.
Aside from a product blitz to counter Chinese models being pushed to European consumers, including by BYD, Changan and GAC, domestic firms will focus on lobbying to persuade the European Union to reconsider its 2035 ban on combustion-engine cars.
Attention will also be on U.S. President Donald Trump's tariffs on European-made cars.
Even if a U.S.-EU trade deal agreed in July goes ahead, European automakers would face a 15% tariff that could force them not to sell less profitable models in the U.S.
European automakers at the IAA Mobility show in Munich, running from September 9-12, also face sinking sales in China, the biggest single market for Volkswagen, BMW and Mercedes-Benz.
Meanwhile, auto executives and lobby groups are pushing hard for the EU's fossil-fuel car ban, which is up for review by the end of 2025, to be scrapped or changed.
BMW CEO Oliver Zipse called the ban a "big mistake" on Friday, seeking emissions regulations instead, that capture a vehicle's entire supply chain.
Danijel Visevic, managing partner at climate tech-focused venture capital firm World Fund, said such lobbying by European automakers was "stupid" and that "they should put their energy into building the best, cheapest cars to out-compete the Chinese."
China remains the biggest challenge for Europe's auto industry. According to consultancy AlixPartners, as recently as 2020, global automakers had a 62% market share in China, which shrank to 46% in 2023 and could drop to 28% by 2030.
Porsche has felt that pain acutely after seeing its Chinese sales fall 28% in the first half, and will suffer the ignominy of dropping out of Germany's benchmark blue-chip index on September 22 - almost three years to the day since its landmark initial public offering.
That will further raise pressure on Oliver Blume, CEO of Porsche parent Volkswagen, to drop his unpopular dual role as Porsche's CEO.
Chinese automakers also pose a problem for the likes of Volkswagen in Europe.
According to JATO Dynamics, Chinese brands almost doubled their European market share to 4.8% through July this year versus the same period in 2024.
And consultants McKinsey estimate that within a decade, Chinese automakers could command a share equal to what Japanese and Korean automakers enjoy now, of 14% and 9%, respectively.
Phil Dunne, a managing director at consultancy Stax, said Europe's automakers have moved too late to counter this threat after years of complacency, and now, "the Chinese are here to stay."
(Reporting by Nick Carey, Christoph Steitz, Christina Amann, Rachel More and Ilona Wissenbach; Editing by Bernadette Baum)
European automakers are confronting U.S. tariff hikes, competition from Chinese brands, and the costly transition to electrification.
Chinese brands have nearly doubled their market share in Europe to 4.8%, posing a significant challenge to established European manufacturers.
Many European automakers are lobbying to change or scrap the EU's fossil-fuel car ban, with BMW's CEO calling it a 'big mistake' and advocating for emissions regulations instead.
European automakers may face a 15% tariff on cars sold in the U.S., potentially leading them to avoid selling less profitable models in that market.
Porsche has experienced a significant decline in Chinese sales, dropping 28% in the first half of the year, which has raised concerns about its market position.
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