China auto suppliers and EV makers participate in Germany's major trade fair

New Delhi

The Frankfurt trade fair, Automechanika, is witnessing a significant influx of Chinese automotive industry participants, with nearly 900 auto suppliers and several electric vehicle (EV) manufacturers from China showcasing their products and technologies. This substantial presence shows the Chinese automotive sector's determination to expand its global footprint and counteract declining domestic profits, despite looming trade barriers in international markets.

The event, which traditionally focuses on suppliers, has been expanded this year to include an "EV Expo" featuring Chinese carmakers such as BYD, Geely, Hongqi, and GAC International. This addition was organised in collaboration with the China Council for the Promotion of International Trade, highlighting the growing importance of Chinese EV manufacturers in the global automotive landscape.

Geely, represented by Senior Vice-President Victor Yang, demonstrated a particularly strong commitment to the European market. Despite facing potential tariffs of up to 19.3 per cent on its China-made EVs under proposed European Commission plans, Yang emphasised Geely's unwavering dedication to Europe.

He stated, "Even if some in Europe turn against us, we will never turn against the European market," underscoring the company's resolve to maintain and grow its presence in the region. Yang reported that Geely sold approximately 200,000 cars in Europe during the first half of the year, indicating the company's significant market penetration.

The Chinese auto industry's investment in overseas expansion comes at a time when both Europe and North America are implementing trade barriers to curb the influx of China-made EVs. These measures are based on allegations that Chinese EVs benefit from unfair subsidies, creating a challenging environment for Chinese manufacturers seeking to expand globally.

Olaf Musshoff, Automechanika's director, explained that the inclusion of the EV Expo aims to build trust and familiarity with Chinese-made EVs in the industry. This move reflects the growing influence of Chinese automakers in the European market, where their share of passenger car sales has increased from 12 per cent to 17 per cent in the first seven months of 2024, according to data from automotive consultancy Inovev.

The overwhelming presence of Chinese suppliers at the fair - almost double the number of German suppliers in attendance - highlights their increasingly crucial role in the global supply chain. This shift is particularly significant as Chinese carmakers explore local production options in Europe and other regions to navigate around trade tariffs.

A recent PwC study has shed light on the challenges faced by German suppliers, noting that a focus on cost efficiency and limited access to capital are hindering their ability to invest in innovative technologies. In contrast, Chinese companies, often backed by state support, are more likely to invest in advancing battery and software technologies, potentially gaining market share from their German and Japanese counterparts.

Despite these challenges, the scale and scope of Automechanika Frankfurt, featuring 4,200 companies from over 170 countries, reinforces Europe's continued importance as a hub for innovation in the automotive sector. Frank Schlehuber of Europe's supplier association CLEPA affirmed this sentiment, stating, "Frankfurt is still the centre of gravity."