Volkswagen chief seeks policy support as Chinese competition pressures European carmakers

Volkswagen chief executive Oliver Blume renewed calls for more flexible regulation and incentives for local manufacturing as Europe’s mass-market car industry faces pressure from Chinese competition and a changing market. He made the appeal at an event alongside the Paris motor show on October 13, Reuters reports through CNA.

The issue combines the price customers can afford with the costs manufacturers need to control. Reuters reports that Volkswagen, Stellantis and Renault together account for more than 60% of European car production, and all face growing pressure to produce affordable electric vehicles.

The groups are heavily exposed to the mass-market segment, where large sales volumes typically come with thin profit margins. A margin describes profit relative to sales; high unit volumes do not necessarily mean a large profit share. That business model places particular weight on controlling the cost of each vehicle while competing on price.

Blume said Volkswagen’s future could not rest on export profits alone. He said its European operations needed to be profitable, resilient and competitive and called for the region’s industrial base to be protected.

Blume is asking policymakers for regulatory flexibility and incentives that support local manufacturing.

Volkswagen, Stellantis and Renault are using the Paris show to present new electric-vehicle models. European demand for the technology is increasing, helped by higher fuel prices and a growing range of lower-cost vehicles.

The show is also hosting Chinese brands in record numbers. They are pursuing growth in Europe as their home market slows, increasing European manufacturers’ concern about the competitive effect of cheaper imports.

Blume’s call comes during a major internal restructuring at Volkswagen. Reuters describes it as the company’s biggest, including tens of thousands of job cuts and possible factory closures, with opposition from unions.