China conquers space in Europe
The presence of Chinese brands at the 2026 Paris Motor Show is the symbol of this change. Chinese brands now represent 50% of exhibitors, compared to 23% in 2024, while their market share in Europe has reached around 10% of total registrations, with a particularly strong presence in electric and plug-in hybrid vehicles.
According to Allianz Research, the risk for European manufacturers is that of continuing to lose ground in the fastest growing segments, after having invested for years in the defense of traditional technologies rather than accelerating on the electrical and digital transformation.
While in France and Germany battery electric vehicles represent 30% and 26% of new registrations respectively, in Italy the share remains less than 10%. A significant gap that highlights how the transition towards low-emission mobility is proceeding at different speeds in the main European markets. For Allianz Research, this fragmentation of demand represents one of the main critical issues for the development of a European industry.
The value shifts from motors and mechanics to batteries and software
The automotive industrial paradigm is changing radically. If in traditional vehicles the engine and chassis represented up to 45% of the value of the vehicle, in electric models batteries and software today generate between 50% and 60% of the overall value.
According to Allianz Research, Europe's future competitiveness will depend on its ability to strengthen itself in these strategic areas, developing skills in design, intellectual property, semiconductors and new technologies for autonomous mobility.
The study highlights how the main German manufacturers have already lost significant market shares in both Europe and China from 2021, with a reduction in added value per vehicle of between 30% and 45% in the European market. If this trend were to continue until 2030, Allianz Research estimates a further erosion of around 3 billion euros in added value, equivalent to around four percentage points of EBITDA margin.
Italy, braking components
For Italy the central theme concerns components. The Italian supply chain has over 2,100 companies, approximately 168,000 employees and a turnover of more than 55 billion euros, but in recent years it has shown signs of a slowdown, confirming the difficulties that are affecting the entire European supply chain.
The vulnerability of the sector derives from its strong integration with the main European automotive markets. Over 80% of Italian component exports are destined for Europe. Germany represents the main target market, followed by France and Spain. This means that the health of the Italian supply chain depends to a large extent on the performance of the large European manufacturers and the stability of continental manufacturing.
"The first signs of pressure are already evident - underlines Gianluigi Iacovino, head of Credit Assessment MMEA at Allianz Trade -. The weakness of the German automotive industry is being transferred to Italian suppliers, with a reduction in component exports to Germany and a drop in the production of parts and accessories which confirm the slowdown along the entire value chain. At the same time, Chinese competition continues to gain ground. Chinese brands now represent a significant share of the European market and even higher shares in the segments electrified, while the competitive advantage is increasingly shifting from traditional mechanical components towards batteries, electronics and software, the main risk is not so much a sharp reduction in volumes, but a progressive erosion of added value. This requires significant investments to adapt products and industrial processes", concludes Iacovino.
Pressure on liquidity and investments
In addition to industrial challenges, growing pressures are emerging on the financial front. Major European manufacturers have seen a sharp deterioration in profitability in recent years, with a significant reduction in value added per vehicle and an increased focus on cash generation. This pressure inevitably reflects on suppliers in terms of pricing, required investments and management of working capital.
The tension along the supply chain is also visible in the financial indicators of the components. Over the last three years, average inventory days have increased from approximately 63 to 78 days, while average collection times have increased from 85 to 89 days. As a result, the cash conversion cycle worsened from 41 to 50 days, highlighting an increasing share of liquidity absorbed by operational management. The increase in inventories represents a particularly significant signal because it reflects a lower rotation of volumes and a less dynamic demand along the supply chain, with direct effects on the cash flow and financial needs of companies.
"Pressure on the supply chain is therefore not only manifested through demand, but also through liquidity - explains Gianluigi Iacovino -. Lower margins, investments required by the technological transition and greater attention to cash flow by OEMs (Original Equipment Manufacturers) are increasing financial pressure along the supply chain. For companies most exposed to traditional technologies, the risk is not only industrial, but also linked to the ability to maintain adequate cash generation and support working capital needs.
In this context we observe a growing polarization of the supply chain: companies better positioned in the electrification, electronics and software segments show a greater ability to adapt, while suppliers linked to traditional technologies remain more exposed to the ongoing transformation. The challenge for Italian components is not only to defend volumes, but to preserve margins, the ability to generate cash and technological competitiveness", concludes Iacovino.
