German imports of Chinese vehicles and parts surged by 75 percent in the first half of the year, while exports decreased, signaling increased pressure from Asian competition on the domestic market of the European giant, a study by the IW Institute has shown.
Several Chinese brands entered the German market this year, the institute noted, adding that Germans can now purchase eight of them. Their market share in sales remains very modest at only 1.5 percent.
The surge in imports in the first half of the year was also fueled by cars produced in China by foreign automakers, such as BMW’s electric iX3 from Germany.
The German institute’s research shows that German exports of vehicles and parts to China simultaneously fell by 21 percent, accounting for three-quarters of the total decline in exports to China.
– The business model that previously supported car production in Germany – intercontinental export of high-quality vehicles – is increasingly under pressure – wrote the authors of the study, Juergen Matthes and Thomas Puls.
– German manufacturers have been rapidly relocating production to China for years, now even in the previously resistant premium segment – they noted.
The broader picture shows that vehicles are increasingly Asian products, with vehicles produced in Asian countries accounting for nearly 60 percent of global production last year. In 2000, their share was only about 31 percent.
Europe is losing significance in the automotive sector, and only Germany and Spain have retained their position among the top ten global producers. In 2000, the group also included France, Britain, and Italy. The roots of Germany’s relative resilience lie in its early entry into the Chinese market in the 1980s, writes IW.
Reducing Risks?
Germany has at times been considered a weak link in the West’s efforts to detach from China, given the strong business ties between Berlin and the Asian superpower, which became Germany’s largest trading partner in 2016. Last year, Berlin also joined those seeking to reduce dependence on China.
An analysis of the 17 percent decline in German imports from China in the first half of the year reveals the first signs of reducing Germany’s dependence on China, conclude the authors of the IW study.
About 70 percent of groups of products with relatively high value today have a smaller share in the Chinese market. Until recently, they accounted for more than half of Chinese imports.
The market share of just under 16 percent of these groups of products has decreased by more than 20 percentage points, the research showed, without naming specific products or market shares.
It is too early to draw clear conclusions from the data on risk reduction, the institute emphasizes, adding that authorities must provide them with more data.
– We urgently need information to know which products are essential, what role they play in the supply chains of companies, and whether they can be sourced in sufficient quantities and in a short time from other countries or from domestic production – they stated from IW.
