Europeans major on tech and design at Munich to slow China’s march

European car makers are betting that advanced technology and their long-standing leadership on design will give the cars displayed at next week’s Munich motor show an edge over formidable Chinese competition. Munich is shaping up to be the biggest European motor show since the Covid pandemic for new model launches, as European car makers try to rejuvenate a sluggish market. However, the Chinese are also at the event in force as they look to increase an already booming market share. No fewer than 14 Chinese car makers will exhibit at the Munich event, starting on 8 September, compared with 10 European brands, according to data from market researcher Inovev. Korea's Hyundai and Kia are returning to the event, but the Japanese are absent. Stellantis is represented by Opel/Vauxhall and affiliated Chinese brand Leapmotor. “This year, the event seems to be primarily a Sino-German battle for supremacy in the electric vehicle arena,” said Jamel Taganza, vice-president at Inovev. According to Inovev's data, 23 new model launches are electric, three plug-in hybrid and two hybrid. The big launches are all on the German side, with BMW premiering its Neue Klasse platform with the new iX3 SUV and Mercedes-Benz unveiling the new electric GLC EQ, debuting the new MB:EA platform. Both SUVs are going big on technology that they hope can match or beat equivalent Chinese developments, including 800V platforms for rapid charging and a software-first approach to electronics and digital information. For example, the GLC EQ has the largest screen ever fitted to a Mercedes, at 39in wide, while BMW claims an EV range of nearly 500 miles. The German premium brands are largely insulated from the Chinese in Europe at least, where the competition so far has mainly been hitting the volume end of the market. That competition has been hotting up in recent months, with the share for Chinese car makers in Europe hitting 5.1% in August, according to figures from the bank UBS. The rises of MG, BYD and Chery’s Omoda and Jaecoo brands have had big impacts in Spain, where Chinese brands grabbed a massive 12% share in August, and the UK, where the share stood at 7.4%. “The growing share of Chinese OEMs in Europe is particularly negative for Stellantis and Renault,” UBS bank analyst Patrick Hummel said in a note to investors. While MG is absent from Munich, BYD showing off its latest PHEV the Seal 06 DM-i estate, while Omoda and Jaecoo are using the event to launch in Germany, marking a push into Europe’s biggest market after successes in the UK, Spain and Italy. Their combined share in the UK for August stood at nearly 3%. Renault meanwhile chose Munich to launch the latest version of its Clio supermini, its biggest-selling model in the region and a key weapon in its battle to retain and build share at the affordable end of the market. Aside from the BYD Dolphin Surf and the MG 3, small cars remain a weakness of the Chinese in Europe, and the Volkswagen Group will demonstrate in Munich what it hopes will be a future strength in the arena of small EVs. It will show off production versions of the related Volkswagen ID Polo, Volkswagen ID Cross, Cupra Raval and Skoda Epiq, albeit camouflaged, in the run-up to the first launch in 2026, with prices promised from around £22,000. While small cars are good for keeping market share, the opportunity for profit comes from bigger models and that’s where the Europeans are under threat from the Chinese, particularly in China where competition is fiercest. The cost competitiveness of the Chinese, particularly on EVs, is hurting global players after a prolonged period of rising prices. “The era of pricing power for the OEMs has come to an early end,” wrote Fabian Piontek, managing director at consultantcy Alix Partners, in a new report. The report’s data shows that profits have swelled in the 15 years since the global financial crisis through a combination of a pivot to SUVs and then rising prices following the Covid supply squeeze. That’s now come to a screeching halt with average EBIT (earnings before interest and taxes) margins for car makers in Europe dropping from around 12% in the first quarter of 2023 to around 4% the quarter ending June this year. Factors include price wars, falling ICE profits, cost inflation and US trade tariffs, according to Piontek. European car makers are using the show to double down on their design strength – an area in which they remain globally ahead of the field as they look cement their brand advantage and keep pricing power. For example, Audi is showing off its new ‘TT’, the Concept C, Cupra is unveiling the Tindaya concept and Skoda is teasing a new electric Octavia estate with the Vision O. Vauxhall and Hyundai meanwhile are reviving the tried and tested design language of the hot hatch as they unveil concepts previewing the next Corsa supermini and a new compact addition to the Ioniq EV family. As China marches towards a possible 10% share in Europe by 2030 (Alix Partners’ prediction), it will be the models launched by European car makers at Munich next week that will be charged with slowing that growth.

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Europeans major on tech and design at Munich to slow China’s march

The German trade show is shaping up to be the biggest in Europe since Covid for new model launches

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Europeans major on tech and design at Munich to slow China’s march

The German trade show is shaping up to be the biggest in Europe since Covid for new model launches

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