The rapid expansion of Chinese car makers into Europe has put established manufacturers under immense pressure: they’re losing market share and sales to low-cost rivals, which in turn is reducing the efficiency of their manufacturing. The economies of scale to which they work depend on production targets they’re no longer close to hitting.
That’s best shown by the ongoing crisis within the Volkswagen Group, which has been working to cut its annual production capacity from around 12 million cars in 2020 to nine million. Doing so will require shedding 100,000 jobs and potentially closing four factories.
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