The new trend of Chinese car companies "going overseas": the acquisition of German factories is a strategic choice, opportunities and challenges related to technology, market and future
On January 16, 2025, Reuters reported that several Chinese automakers are focusing on some of Germany's Volkswagen plants that are planned to close, especially the Dresden and Osnabrück plants. Volkswagen has decided to close the ID.3 electric vehicle production line at its Dresden plant from 2025 and plans to stop production of the T-Roc Cabrio at its Osnabrück plant by 2027. With the electrification transformation of the European automotive industry and the changes in market demand, the strategic intention of Chinese automakers to acquire German factories has gradually emerged, which has become an important part of the changes in the global automotive industry pattern. China Exportsemi will analyze the future trend and impact of the event for you from different perspectives.
Potential motivations for acquisitions
1. Expand market share in Europe
As one of the centers of the global automotive manufacturing industry, Germany is home to a number of long-established and technologically advanced automotive brands. The acquisition of the German factory by a Chinese automaker will be able to increase its production capacity and brand recognition in the European market in a short period of time. Especially in the context of the increasing importance of the electric vehicle market, the acquisition of local factories will not only accelerate the entry into the European market, but also pave the way for future market expansion.
2. Circumvention of EU tariff barriers
In October 2024, the European Commission announced an additional tariff of up to 35.3% on electric vehicles imported from China, a policy that put pressure on the European expansion of Chinese automakers. By acquiring a local plant in Germany, Chinese automakers will be able to circumvent this tariff barrier and reduce the impact of tariffs on price competitiveness. In addition, local production can lead to a more competitive cost structure and increase the price advantage of products in the European market.
3. Integration of technology and human resources
The German automotive industry is a global leader in technological innovation, engineering and production processes. Through the acquisition of German factories, Chinese car companies can learn and introduce advanced manufacturing technology and management experience to improve their own technical level. In addition, the German factory has a group of experienced automotive manufacturing talents, which will provide valuable technical support and local production capacity for Chinese car companies.
Pictured: Volkswagen has decided to close its Dresden plant and may sell it to a Chinese automaker
The Challenge
1. Trade unions and labor market pressures
Volkswagen's layoffs have already provoked a strong reaction from German trade unions. Union protests and negotiations with companies are often complex and time-consuming, which means that Chinese automakers need to manage their relationship with German unions during the takeover process to ensure that workers' interests are protected and supported by unions. Such cross-border acquisitions involve complex social and labor issues, which require a high degree of attention and careful response from Chinese automakers.
2. The integration of culture and management
There are significant differences between China and Germany in terms of corporate culture, management models and working methods. After acquiring the German factory, Chinese automakers not only had to integrate technology, but also had to overcome cultural differences and management model conflicts. This requires an investment of time and resources to ensure a smooth post-acquisition integration for optimal operational efficiency.
3. Market competition and brand recognition
Although Chinese automakers have made significant technological progress and market expansion in recent years, brand recognition and word-of-mouth in the European market are still in their infancy. After the acquisition of the German factory, Chinese automakers need to invest more energy and capital in brand building, marketing and after-sales service system improvement, strive for higher recognition in the European market, and cope with fierce competition from local and global incumbents.
Impact on the German automotive industry
1. Industrial transformation and innovation opportunities
In the face of the wave of electrification and intelligence in the global automotive industry, the German automotive industry is in a critical period of transformation. Traditional internal combustion engine models are gradually being phased out, parts suppliers are facing bankruptcy pressure, and market demand is also affected by increasingly stringent environmental regulations. The acquisition of Chinese automakers can inject new capital, technology and market resources into the German automotive industry, and accelerate its transformation to electrification and intelligence.
2. Employment and economic impact
Volkswagen's layoffs are already having a wide impact on German society, and the acquisition of these plants will help stabilize local employment and reduce the social instability caused by layoffs. The investment of Chinese automakers will not only preserve more jobs, but also inject vitality into the German economy by driving the development of local supply chains and related industries.
Future outlook
1. Deepening cooperation between China and the EU in the automotive industry
Through the acquisition of the German factory, Chinese automakers will not only be able to increase their production capacity and market share, but also develop deeper cooperation with German automakers in terms of technology and product innovation. This initiative will promote the in-depth integration of the automotive industry between China and Europe, achieve complementary advantages, and promote the common development of both parties in the field of electrification and intelligence.
2. The global automotive industry is reshaped
With the rise of Chinese car companies, the global auto industry pattern is undergoing profound changes. The acquisition of Chinese companies will promote global automakers to accelerate their layout and competition in the fields of electrification and intelligence. In the future, the European market will not only be a strategic center for Chinese automakers, but also the key to the development of the global automotive industry.
Forecast Analysis: Which Chinese OEMs are likely to acquire German factories?
Based on current industry trends and the "going global" strategy of Chinese automakers, the following companies are likely to be potential candidates for the acquisition of German factories:
1. BYD
As a leading company in China's electric vehicle field, BYD has expanded rapidly in the global market in recent years. BYD has established a sales and service network in several European countries, and the acquisition of the German plant will further strengthen its competitiveness in the European market. At the same time, BYD's technological advantages in battery technology, intelligent driving and green manufacturing have enabled it to have strong technology integration capabilities, providing potential for the transformation and upgrading of German factories.
2. Geely Automobile
Geely has successfully occupied a place in the global automotive industry chain through the acquisition of European car brands such as Volvo and Lotus. The acquisition of the German plant will not only further increase its production capacity in the European market, but also accelerate its electrification transformation with the help of a local R&D team and advanced manufacturing technology. In addition, Geely's deployment of intelligent network technology has also laid the foundation for its further development in the field of electrification and intelligence.
3. NIO
NIO is a star enterprise in China's new energy vehicle field, and has made certain breakthroughs in the European market in recent years. NIO's positioning and brand image for high-end electric vehicles have gradually made its competitive advantage in Europe gradually apparent. The acquisition of the German plant, especially for the production line for electric vehicles, will enable NIO to expand its production and sales network in the European market more quickly to meet the growing market demand.
4. Great Wall Motors
Great Wall Motor has a strong brand influence in the field of SUVs and pickup trucks, and has also actively deployed in the field of new energy in recent years. The acquisition of the German plant will not only strengthen its production capacity in the European market, but also provide an opportunity to enter the field of electric vehicles. Great Wall Motor's globalization strategy and layout in Europe have also enabled it to have sufficient capital and technical reserves to become a strong competitor for acquisitions.
Specific data and examples
- Acquisition costs: According to market analysis, the purchase price of the German plant is approximately between 100 million and 300 million euros, equivalent to about 103 million to 309 million US dollars. This investment is not only a strategic step for Chinese automakers to enter the European market, but also brings direct advantages in terms of tariffs and production costs.
- Tariff implications: The EU has imposed tariffs of up to 35.3% on electric vehicles imported from China. By producing locally in Germany, Chinese automakers are able to circumvent these tariff barriers, thereby reducing costs and improving the market competitiveness of their products.
- Market potential: In 2022, the sales volume of new energy vehicles in Europe has reached more than 2 million units, and it continues to grow. The acquisition of the German plant will provide opportunities for Chinese automakers to further establish themselves in this market.
- Corporate dynamics: Several Chinese automakers have clearly expressed interest in acquiring German factories, with the most promising companies including BYD, Geely Automobile, and NIO. Through the acquisition of factories, these car companies expect to expand rapidly in the European market and improve the market competitiveness of their products with the help of the technological advantages of the German automobile manufacturing industry.
Conclusion
The acquisition of the German plant by a Chinese automaker is a strategic attempt, not only with a commercial incentive to increase market share, but also with a long-term view to reposition itself in the global automotive industry. The active layout of BYD, Geely and other enterprises demonstrates the ambition of Chinese car companies in the global expansion. For the German automotive industry, this is also an opportunity for industrial transformation and technological innovation. In the end, whether the two parties can achieve mutual benefit and win-win results depends on the rapid integration and localized operation capabilities of Chinese automakers after the acquisition, and at the same time, they need to continue to explore and move forward in multi-dimensional challenges such as technology, market and culture.
