China is destined for the German auto industry

The numbers are huge, as so often when it comes to China: Already in the People’s Republic far more than 20 million cars are sold per year. 30 million new registrations are only a matter of time. Maybe 2025? “That’s almost the day after tomorrow,” says Audi CEO Rupert Stadler. By comparison, in Germany about three million cars are sold each year. “There are 14 million pieces in Europe, so we’re talking twice about Europe,” says Stadler. “China is and remains the key market par excellence.”

In fact, nowhere is the German automotive industry selling more. In the VW Group, there are four out of ten cars. At BMW and Daimler, dependencies are almost equally high. A weakness in China, that can no longer afford today. Correspondingly large is the casserole at the Beijing Auto Show. And all behave accordingly.

In addition to Audi CEO Stadler, the new group boss Herbert Diess also traveled to Volkswagen, with several board members in tow. It was the first visit abroad for Diess, after he had taken over the post of VW CEO Matthias Müller last week. Under Diess’ leadership, Volkswagen plans to spend 15 billion euros on future projects such as electromobility or autonomous driving together with local Chinese partners over the next four years.

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The plans of Audi are also ambitious. In the next five to six years, the VW subsidiary plans to double its sales in China to about 1.2 million vehicles, announces Audi CEO Stadler. Above all the so-called premium manufacturers, one believes in Ingolstadt, will grow in the coming years. So far, about ten percent of cars sold in China belong to the high-priced segment. In Europe, there are currently 15 percent. The hope is that China will gradually adjust to Europe. This thesis is supported by the announcement by China’s party leader Xi Jinping to lower import tariffs for cars. So far, 25 percent are due.

Affected are mainly expensive sedans and SUVs. When exactly, and what percentage of tariffs will ultimately be reduced, however, is still unclear. In the industry vague the summer is called as an appointment. Then more cars could be imported from Europe – a lucrative business for manufacturers. But until the time has come, orders will be reduced. Many potential buyers are delaying the purchase of an import car to pay less.

Since 1994 manufacturers have had to partner with a local partner

Duty-free are only cars that are made in China. Since 1994 manufacturers have been required to partner with a local partner and operate a joint venture. The foreign manufacturers may not hold more than half of the shares in these joint ventures. However, a few days before the beginning of the fair, the government in Beijing announced that it would abolish the forced partnerships. In the business with commercial vehicles, the limit for investments in 2020 should be dropped, for passenger cars 2022 – for electric cars already this year. For the German manufacturers, however, this has no effect at first.

“Everything that concerns conventional drives up to 2022, we first discuss with our existing partners,” says Daimler CEO Dieter Zetsche. And Audi Chairman Stadler adds: “We will stick to our strategy, which we set up with our joint venture partners.” BMW is currently working on a new joint venture with the Chinese manufacturer Great Wall. In cooperation, electric minis are to be built. In principle, BMW could build the electric cars alone, as the restrictions already fall this year. “We will do a joint venture there,” says BMW CEO Harald Krüger nonetheless. Just do not offend, just do not make mistakes, that’s the motto of the manufacturer.

How far that can go, showed mid-February Daimler. “Look at a situation from all angles, and you will become more open”, with this quote from the hated by the Chinese leadership Dalai Lama, the group had promoted a coupe. What followed was a kowtowing. In a letter to the Chinese ambassador in Berlin, Daimler CEO Zetsche and his governor in Beijing, Hubertus Troska, asked for forgiveness “for the pain and grief” caused to them by the “negligent and tactless error of the Chinese people”. A little bit covered? As “appropriate”, Troska defends the reaction of his group.