As one of the world’s leading vehicle manufacturers, with China being one of its most solid markets, the German sector has repeatedly expressed its disagreement to the European Commission regarding the anti-subsidy investigation.
Now, Federal Minister of Transport Volker Wissing takes a stand in the situation, defending the interest of the local industry, so that companies continue to generate added value both in Germany and in the global market.
“We want international trade to take place in a fair and level competitive environment, not a trade war through punitive tariffs,” he tells local media.
And he emphasizes: “We do not want to close the market, we want to compete.”
Also, the Federal Minister of Transport insists that it is essential for a country like Germany, which depends heavily on global trade, to allow fair competition.
“We produce for the whole world and want to continue doing so in the future. Here we are in an excellent international position in terms of the quality of our products,” the politician points out to the Stuttgarter Zeitung.
In this context, recently at the Beijing Auto Show, Volkswagen announced its intention to increase investments in China, as well as to develop a range of affordable and innovative small electric cars there.
VW has traditionally had a strong connection with the Asian country, being the first Western manufacturer allowed to produce cars there in the 1980s.
At times, its market share exceeded 20 per cent, and now it generates around 40 per cent of its total sales in China.
The same goes for other German manufacturers, such as Mercedes-Benz and BMW, who also generate around 35 per cent of their sales there.
Although these manufacturers’ share of electric vehicles (EVs) in China is not very high, many of the cars they produce there are imported and sold in Europe.
In this regard, these businesses could be harmed if the European Commission decides to impose tariffs on vehicles manufactured in the Asian giant, as there is fear in the sector that they might respond in a similar manner.
The first repercussions were already seen last January, when China initiated an anti-dumping investigation into brandy imports from Europe.
This measure was largely seen as a retaliation specifically aimed at France, as it strongly supported the European Commission’s examination.
French authorities had initially introduced an ecological bonus that granted 4,000 euros to users who wanted to buy an electric car, but excluded Chinese vehicles from this.
In view of this situation, Oliver Zipse, CEO of BMW, reacts: “It could end up being like shooting oneself in the foot.”
The manufacturer imports to Europe the Mini EV and the iX3 manufactured in China, so it depends heavily on income from its business in this country.
Moreover, this is the company’s second-largest market after Europe, with nearly 32 per cent of sales in the first quarter.
However, the value chain also comes into play here.
As Zipse highlights, both BMW and other car manufacturers have “bilateral dependencies not only in the final product but also in components and raw materials.”
This could impact the European Union’s (EU) industrial plan, considering that according to the firm’s representative, “there will be no car in the EU that does not have Chinese components.”
And he states: “There is no Green Deal in Europe without resources from China.”
This is evident in a recent report by the research organization BloombergNEF.
They show that China’s share of global production capacity is now over 80 per cent for 11 essential technologies in the energy transition.
Just last year, its share in global production capacity increased in 12 key areas, including battery components, metal refining, and hydrogen electrolyzers.
Similarly, Gernot Döllner, CEO of Audi, part of the Volkswagen Group, said that “the geopolitical situation is becoming increasingly complex.”
And at the same time, he stressed the importance of supporting free and fair trade, as “it is the basis for growth and prosperity.”
Despite constant warnings from both the public and private sectors, recently, European Trade Commissioner Valdis Dombrovskis said that tariffs could be imposed “before the summer holidays.”
