Mercedes is the latest company to revise its 2024 projections downward.

[TigerDrummer]

Mercedes, BMW, Volvo

https://www.cnbc.com/2024/09/20/mercedes-shares-slump-after-cutting-2024-guidance-on-weak-china-demand.html

[AmericaMonster]

Excellent article.

The manufacturers prioritise EBIT and the adverse impact on volume attributed to the Chinese economy, rather than the harm inflicted by Chinese automotive makers or electric vehicles, although others may seize upon those points.

[Freelele]

The sales volumes of Chinese manufacturers have not significantly affected premium brands in any region, although premium brand sales have constituted a substantial and expanding market in China.

The significant loss of demand and development potential in China will substantially affect premium brands both now and in the coming years. In a decade, Chinese brands may become well-established in Western markets.

I contend that Chinese companies will find it much simpler and therefore faster to capture market share from premium manufacturers than the Koreans and Japanese did before, due to the substantial influence of technology, perceived allure, and monthly expenses on contemporary automobile sales.

They are much simpler, faster, and more cost-effective to accomplish than developing brands, racing heritage, technical superiority, and customer service; hence, the Chinese brands will not need an extensive lead time to become competitive, particularly with junior executive models A/C/1/3A3/A4.

There has been a tendency for a half-life in the duration necessary to build brands. The Korean manufacturers accomplished what the Japanese manufacturers achieved in half the duration. The Chinese producers will do this in much less than half the time required by the Koreans.

Logically, the sales volumes of Korean manufacturers will be most susceptible to competition from Chinese manufacturers; nonetheless, it would be intriguing to see if their established strength and relatively early investments in electric vehicle and internal combustion engine capabilities will empower them to mount a formidable defence.

I believe that European brands linked to compact vehicles, such as Renault, Peugeot, and Fiat, are going to have significant challenges in competing effectively. They depend on selling substantial quantities of modestly sized vehicles with little profit margins, while bearing the expenses of their heritage.

This renders them very susceptible, since consumers are likely to change brands if the monthly expense for a comparable model from an other manufacturer is £20 lower. Currently, Chinese brands may significantly undercut that sum while still maintaining profitability.

Conceding a portion of earnings potential via attractive monthly promotions is a very cost-effective strategy for developing a competitive automotive brand. Let us ascertain if the EU adopts a more defensive strategy to safeguard its own manufacturers.

[AmericaMonster]

Indeed, possessing a decade of technological superiority in battery production over the West, coupled with far lower manufacturing costs, has proven to be a considerable benefit. While expediting market entry is advantageous.

While it is simple to advocate for 'building a wall', seeing China's cities brimming with advanced battery-powered buses prompts the question, 'Why should we exclude ourselves from such progress?'

[Captiva]

I believe there are similarities between the events in the USA throughout the 1980s and 1990s, when Japanese brands significantly increased their market share to the detriment of local automobile manufacturers. At that time, the USA significantly surpassed the UK in terms of lease and monthly payment options for automobile acquisition, facilitating market entry for newcomers.

Regarding cost structure, a significant expense that new entrants are not burdened with is the long-term obligation to former employees for pension and perhaps healthcare benefits, which established firms must manage to varying degrees. A buddy of mine was engaged in consultant work in the USA at a period when major domestic automakers were facing financial instability and completed a project for GM. One of the Executive Vice Presidents in Detroit said to him, "You are erroneously assuming that this enterprise is chiefly an automaker." We are not. We are a supplier of pensions and healthcare that also manufactures autos.

[Barringer]

Delphi Automotive sought Chapter 11 protection due to their agreement to absorb surplus labour from GM, which subsequently led to unsustainable pension and healthcare expenditures after extensive layoffs.

[Freelele]

That precisely exemplifies what I referred to as “bearing the burden of their legacy.”