Having worked at a major car maker for most of the noughties, I saw many changes permeating the industry. From renewable eco fuel engines to the introduction of Internet connectivity in the cabin – something hotly debated due to safety concerns about distracting drivers.
Over that time, we saw car companies expanding rapidly, buying other brands, creating enormous brand portfolios offering such a broad range of products it was almost impossible to fathom. How could they finance this? Just thinking about a company like Volkswagen Group, for example, and its vast range of brands and models, Audi– VW – Skoda– Seat – Cupra, and on and on.
Then of course the Chinese entered the picture. At first our western brands tried to take advantage of the ’bling-bling’ China market with their local partnerships and production. Little did the Europeans and Americans know that this was the first stage of failure for them.
China, with its Communist Party backers, scooped up such storied brands as Volvo Cars in Sweden from the Ford Motor Company’s bargain basement when the Premier Automotive Group experiment (Jaguar, Land Rover, Aston Martin, and Volvo) was dissolved. And to be fair, Geely, the buyer, injected a lot of cash and breathed new life into the brand.
Once the Chinese had the production thing down, they began to look abroad for wider markets. And with the automotive equivalent of the ‘Nokia moment’ coming with the dawn of the battery electric vehicle, China was able to leapfrog the slower lifecycles that define the European and US OEMs.
Skip forward to today, and you’ll find BYD, ORA, MAXUS, MG, ZEEKR and more on the roads of Europe, jostling for market share as the local automakers struggle to keep their factories open. Why? The answer is simple: the inability to innovate and move beyond the paradigm they had created over the previous 100 years.
There is too big to fail if you are a bank, and too slow to succeed if you are an automaker. Lack of foresight, innovation and investment, a sense that they had all the time in the world, led to the loss of the race. Like the hare in Aesop’s Fable, hubris secured a big loss from which the European automotive industry will never fully recover.
We are now entering a phase of consolidation. Brands will disappear, models will cease production, and you’ll start seeing badge engineering rear its ugly head once more. This, at least for Europe, is what the future holds, despite cries of foul-play from the industry, the deaf ears of the EU Commission, and the inability of the common citizen to afford new cars.
China has won the automotive race in Europe. That’s clear. But what about the US? Tariffs will help defend the local car makers, as will the widespread lack of charging infrastructure, a reliable supply of clear, green energy and a propensity for large cars and trucks. So, while lack of progress doomed the EU industry, lack of progress might just save the US car industry, as the market is not truly ready to switch to EVs – especially now Trump will remove incentives.
Heavy industry is a new buzz word amongst political types across both the US and Europe. The financial services industry trap that most of Europe has flirted with over the last two decades seems to be falling, like the value of the pound and the euro. Perhaps we will once again see the rise of European Industry? The US is already ahead, and now China is looking for cheaper labour to produce their electric vehicles, perhaps they’ll take up the slack and fill some of the empty German factories.
And then again, wait a few years and the wheel will once again spin. One thing is for certain though, the auto industry is getting smaller, and we are moving inexorably toward a future of electric and hybrid passenger cars, whether we like it or not.
Would you buy a new electric car?
