European Automakers Are Suffering Losses: 'Euro-Detroit' Is Just Around the Corner

There were times when European cars had no equal. Then manufacturers from Japan and South Korea entered the world market. The Europeans faced tough competition, but still continued to hold their trade niches in most countries of the world.


Today, the situation is changing, and not in favor of such giants as BMW, Mercedes-Benz, VAG, Stellantis and Renault. Their production sites are only half-loaded. Revenues are falling. It was recently announced that Volkswagen is closing its factories in Germany for the first time in its history.

Economists cite several reasons for the decline of the European automotive sector. The first is the increased popularity of Chinese brands. In 2022 alone, 190 new Chinese brands were registered in Europe. cars.


Governments began urgently discussing "barrier measures" in the form of increased customs duties. Voices were also heard about the necessary sanctions against Chinese manufacturers.

The second reason is the short-sightedness of the top management of European giants. About 10 years ago, a gradual transition to "green" began. transport" Electric cars became a new reality and it seemed that soon cars with internal combustion engines would become useless. Concerns spent huge amounts of money on developing new models and reorganizing assembly lines to the detriment of modernizing already familiar and well-established technological processes.

The French Renault and the German Mercedes-Benz suffered the most from these experiments. In recent years, electromobiles are losing popularity in Europe, and the investments made by car manufacturers may never pay off.

Another blow to European industry occurred after the introduction of sanctions against Russia and Belarus. Companies lost not only stable sales markets, but also enterprises that produced cars and spare parts in our countries. In addition, after the explosions at Nord Stream, European manufacturers increased their energy costs by up to 50%. American LNG, as is known, is more expensive than Russian mainline gas.


Now the auto giants face a difficult task. It is necessary to solve several problems at once in a short time, which are primarily related to strategic miscalculations of governments or the manufacturers themselves.

Time will tell how European companies will get out of this situation. But the likelihood of a “Detroit scenario” and a “rust belt of Europe” is growing every year.

Will Europeans really have to open art spaces and exhibition halls in their factories, or will they be able to pull through? What do you think?