Why European automakers are relocating to China
Audio 04:08
Employees of an automobile factory in Shanghai, China on February 24, 2020. REUTERS / Aly Song
By: Dominique Baillard Follow
9 min
The Beijing World Motor Show opened to the public on Monday and is already a success.
Publicity
European automakers welcome the opening of the World Motor Show in Beijing.
While they are in the doldrums at home, they produce more and more in Chinese factories.
Including to serve their historic market.
Several of them have announced plans for factories in the Middle Kingdom aimed at meeting the needs of their European customers as a priority.
According to the projections of the firm IHS Markit, this will have a very clear impact on the imports of Chinese cars in Europe.
They are now anecdotal, but they should gain momentum in the next five years.
In 2025, 400,000 cars leaving the workshops of the world's factory will be delivered in Europe.
Or one in ten imported vehicles.
And this wave will be mainly fueled by European brands.
From next year, Renault wants to produce its electric Dacia Spring in China, BMW its electric Mini and Daimler the Smart until then manufactured in France at the Hambach site in Lorraine.
Governments call on manufacturers to relocate, but European manufacturers continue to globalize their production
In Europe, they are pursuing their vast plan to rationalize costs while redeploying themselves elsewhere, in other countries.
In France, Renault has planned a savings plan covering 4,600 jobs.
A plan rejected Tuesday by all unions.
At the same time, the diamond brand announces the imminent arrival on the European market of its Arkana SUV which will be assembled in South Korea.
A major restructuring of the automotive industry is also underway in Germany.
Man, the manufacturer of trucks belonging to the Volkswagen group, wants to cut a quarter of its jobs, or 9,500 jobs.
The abandonment of the Moselle factory of Smart by Daimler, the withdrawal of Honda from the European market complete this very dark picture of the automotive industry, but an incomplete picture according to Denis Schemoul.
The IHS analyst points out that there are also factory creations in the high-end niche in Europe, citing Porsche and Tesla in Germany.
And a relocation on European soil of strategic activities, such as the electric battery.
Jobs are disappearing, but market shares are intact, Europe remains in surplus in the automotive sector.
And it could even return to the export records of 2013 and 2017, with annual sales of around 4 million vehicles.
On the other hand, assembly and assembly are outsourced as needed to the countries where the costs are the most advantageous.
Tuesday was in Turkey or Morocco, today is in China.
It is there that Europeans want to manufacture an entry-level electric vehicle to offer it at an affordable price in Europe.
And possibly to Chinese customers if they are buyers.
Because the world's leading automotive market remains very attractive.
While global sales will tumble by 20% this year, Chinese sales will only decline 9% and the Chinese market will have fully recovered to 2019 levels within two years, according to Standard & Poor's.
A balm for all the manufacturers in difficulty in their country of origin present in China.
Two-thirds of passenger cars sold in this country are made by foreign brands associated with local companies.
IN SHORT
In China, the dynamic of the recovery is confirmed with the good figures for industrial activity in September
The PMI index released by the Chinese Bureau of Statistics, which gives an idea of the industry's order books, is at its highest level in seven months, at 51.5, above forecasters' expectations.
Above 50, this figure is synonymous with expansion, below contraction, at the worst time of the health crisis in February it had fallen to 35.7.
Household consumption and the rebound in exports are the two engines of the recovery.
WTO authorizes Europe to sanction US in retaliation for subsidies given to Boieng
This is the last episode of this soap opera which has lasted for sixteen years.
Brussels will be able to impose duties on 4 billion dollars of American products.
The United States are not left out, the WTO has given them the green light to apply taxes on a volume of 7.5 billion dollars of European goods.
In order not to escalate tensions with Washington, Brussels should avoid imposing these rights before the US presidential election.
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