Weak demand for cars and the expansion of Chinese brands into the European market could lead to the closure of eight factories in Europe. This is reported by Bloomberg.
"In the coming years, European car manufacturers will lose between one and two million cars due to Chinese brands. This year, the share of Chinese car manufacturers in Europe will reach around 5%," said Fabian Piontek, head of AlixPartners in Germany.
Car factories are usually profitable if they are designed to produce at least 250,000 cars per year, experts claim. If Chinese manufacturers sell about 2 million cars in Europe by 2030, there will be eight more factories in the region than needed.
Car factories in the EU are currently operating at an average of only 55% capacity, according to data from consulting firm AlixPartners.
Stellantis NV is in the worst position: European plants of the Alfa Romeo manufacturer are operating at about 45% capacity. According to the European Automobile Manufacturers Association, deliveries to Europe grew by only 0.9% last year, reaching around 13 million cars.
Chinese brands like BYD and MG (SAIC Motor Corp.) could capture 10% of the market by 2030, which will increase pressure and force capacity reductions.
According to AlixPartners, closing a large factory with a workforce of about 10,000 people will cost approximately 1.5 billion euros, and the entire process will take one to three years.
