Paris. Even before the press conference begins, a crowd of people forms around the small red-orange car with a roll-up roof. On Monday morning, the Stellantis subsidiary Citroën presented the new interpretation of the duck at the Paris Motor Show.
The new “2CV” with retro charm is not scheduled to come onto the market until 2028. But Citroën has already achieved the marketing coup.
With models like the new Duck, the Renault 4, the Twingo and the VW ID. Polo, Europe's car manufacturers are placing greater emphasis on their local heritage - and are thus seeking an answer to the growing pressure that Chinese manufacturers are causing in their home markets.
Renault boss François Provost relies on emotion instead of interchangeability in competition. “I don’t want to underestimate our Chinese competitors,” he said in a small group of journalists. However, the competition from Asia builds cars with the same design and the same features. Renault therefore relies on personality and emotion.
Volkswagen even gave its opening event the motto “For Europe”. VW boss Oliver Blume gave a speech for Europe on Sunday: “Europe’s future depends on what we make of it.” Production takes place where competitiveness exists. “For Europe, openness also means resolutely representing its own interests,” said Blume.
At the same time, the trade fair shows how strongly China's manufacturers are pushing into Europe: a third of the 60 exhibitors come from China - twice as many as two years ago. Manufacturers are also increasing their market shares. According to calculations by the European car association Acea, Chinese manufacturers achieved almost eleven percent of new registrations in the EU in August, an increase of four percentage points compared to the same month last year.
According to a study by management consultancy Alix Partners, Chinese manufacturers currently produce a comparable electric vehicle around 35 percent cheaper than European competitors.
The European manufacturers are now acting as a united front. Volkswagen, Renault and Stellantis called for a simple and realistic “Made in Europe” framework in a joint statement in June. “We speak with one voice,” said Provost on Monday in response to a question from Handelsblatt.
The manufacturers insist on a 70 percent European added value on the fleet average - Great Britain, Morocco and Turkey should be taken into account because they are part of the production ecosystem of European car manufacturers. It is now crucial that the EU decides quickly and pragmatically and does not regulate technology by technology. “It’s urgent,” Provost said.
Accordingly, they look favorably on what is happening on the political side. After months of disagreement, Chancellor Friedrich Merz and French President Emmanuel Macron have presented a joint industrial paper that calls for mandatory “Made in Europe” quotas for public contracts for key technologies such as electric cars. There is a deal behind this: at Germany's request, the ban on combustion engines is to be relaxed, in return France receives guidelines that are intended to maintain value creation in Europe.
Macron announced an impending “agreement” between France and Germany during his visit to the trade fair on Monday. “We are in the process of finalizing an agreement with our German partners so that Europe can move forward to better protect our industry,” said Macron. The decisive summit will take place in Brussels at the end of the week.
In addition, EU Trade Commissioner Maros Sefcovic agreed in Beijing at the end of last week to limit imports of Chinese hybrid and plug-in hybrid vehicles into the EU. Over the next four years, imports are expected to be only half as high as previously forecast. In return, Beijing is easing export restrictions on rare earths.
For analyst Michael Foundoukidis from Bankhaus Oddo, such political measures can help manufacturers - but only up to a certain point. “If local content rules and measures also apply to hybrids, imports will be slowed down – and the rules of the game will be more balanced,” he says. With “Made in Europe” or local content rules, Chinese manufacturers would have to localize more. “Their costs will inevitably approach European costs.”
However: “If you want to be competitive, you have to be able to develop cars in two years, become more flexible and agile, continuously improve models with updates and quickly catch up with battery chemistry and drivetrain,” says Foundoukidis.
Renault, for example, wants to develop new models in two years instead of three to four, and Volkswagen also wants to become faster. “If Renault or Volkswagen are only five to ten percent higher in price than a Chinese supplier, customers will choose Renault or Volkswagen,” he says.
This is due to the recognition of the brands, but also to dealer and service networks as well as financing options. However, the Chinese competition is catching up here too. BYD, for example, plans to build a network of 200 dealers in France alone by the end of the year.
According to an analysis by management consultancy Alix Partners, decisions must be made now in order to continue to be competitive after 2030. To achieve this, Europe's manufacturers would have to convert faster and more consistently. Otherwise, they risk losing control if they just “sit out” the problem.
The consultants see around 2.5 million vehicles in unused production capacity in Europe. "The process of streamlining cost and management structures is only now really beginning among European manufacturers. This will take around two years until the cost base has noticeably adjusted," says partner Xing Zhou.
Alix Partners recommends that manufacturers concentrate on a few basic models and update them every 24 to 30 months. Software should be seen primarily as a lever to reduce material, warranty and field error costs.
Zhou also sees Europe as highly dependent on batteries: around 80 to 85 percent of global refining capacity for cathode material and battery-suitable raw materials is located outside Europe.
