Difficulties with China - customer pressure at Audi and Mercedes is growing
Created: 12/28/2022, 7:35 am
By: Dominik Jahn
Audi, Mercedes and the problem with the car market in China - supply chains as a risk factor © dpa/ Koki Ktaoka
The market in China is extremely important for German car companies such as Audi, Mercedes and VW.
However, companies are highly dependent in many areas.
Experts call for a rethink.
The fact that these are not easy times for the automotive industry can be seen, among other things, from the fact that Audi recently made statements to
about bankruptcy statements from the board level and the consequences .
At the “Handelsblatt” auto summit, managers and experts have now discussed the problem with China and the supply chains as a major risk factor.
Mercedes has also been struggling with future problems in recent months.
The car manufacturers from Stuttgart are having massive difficulties with their luxury strategy.
The heel is too low.
The car market in China, which is so important, seems to be slipping away from the German car manufacturers more and more.
Audi and the entire parent company VW were surpassed by BYD in November 2022 as the best-selling brand in the country.
Chinese corporations have an advantage over German automakers
As the “Handelsblatt” writes about the car summit, the main topics were the effects of the shortage of raw materials and dependence on China.
Helena Sophie Wisbert, Director of the Center Automotive Research, explained: “Chinese manufacturers have advantages over European manufacturers in the electromobility value chain.”
July 16, 1909, Zwickau
Wisbert makes it clear that German companies have a lot of catching up to do.
VW, together with the company's subsidiary Audi, BMW and Mercedes would therefore have to "find their way around in completely new territory in which Tesla and Chinese manufacturers are already years ahead".
Not only Audi and Mercedes are struggling with delivery bottlenecks
Especially since the energy crisis, German manufacturers have had to keep dealing with chip and semiconductor problems.
Delivery bottlenecks are part of everyday life.
Audi recently explained how to deal with the current situation.
However, the problems also ensure that the Ingolstadt-based company faces a difficult future in the VW group.
BYD Company Limited (BYD)
BYD is the world's largest producer of accumulators, primarily for mobile phones.
The Chinese company is considered a conglomerate.
The BYD subsidiary, BYD-Auto, is one of the largest automobile manufacturers in China.
In 2010, the US business
magazine Bloomberg Businessweek
voted the company the most powerful technology company in the world.
At the meeting of managers and experts, Helena Sophie Wisbert called the reason for the further losses on the Chinese market.
According to the report, manufacturers from China have achieved a very high degree of integration in the supply chain: “Especially with the battery, which is the biggest cost factor in an electric car.
This ranges from the extraction of raw materials, processing to the production of battery cells and modules.
German manufacturers must continue to invest in the future
German manufacturers, on the other hand, are heavily dependent on China and other countries rich in raw materials in this area, according to the “Handelsblatt”.
"According to figures from the CAR Institute, around 66 percent of all battery cells and modules come from China
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According to Wisbert, German automotive companies need to invest even more in
This is the only way to remove dependencies.
At VW, the so-called
"own gigafactories are on the right track"
Mercedes, on the other hand, seems to be a little more hesitant when it comes to
"going into battery cell production itself"
Car companies from Germany need access to their own raw materials
According to the “Handelsblatt” article, according to Uwe Hochgeschurtz, Chief Operating Officer at Stellantis, own lithium production in Germany and Europe is indispensable: “We have to mine raw materials in Germany ourselves.
We may also see fracking in natural gas and oil.”
Stellantis is a European-US automobile manufacturer based in Hoofddorp, The Netherlands.
The company emerged in January 2021 as a holding from the merger of the automotive groups Fiat Chrysler Automobiles (FCA) and Peugeot SA (PSA).
Dependence on China is becoming an increasing problem for Audi, Mercedes and the rest of the German auto industry.
According to the Ifo Institute in Munich
, “German manufacturers would source seven of the nine most important raw materials for the construction of electric cars from China”
However, there are always alternatives.
Problem with China: the human rights situation is becoming increasingly important for manufacturers such as Audi, Mercedes and VW
Another issue that should not be underestimated is the political situation.
Automakers like Audi, Mercedes and VW cannot simply overlook some things over the long term, as the report makes clear.
Human rights can become an important factor from the customer's point of view.
It goes on to say: “In a survey, Bearing Point found that around 70 percent of those surveyed would prefer a product that was produced under human rights-worthy conditions.
More than 50 percent would even be willing to accept a surcharge for this."