Mercedes-Benz to launch around 40 new models by 2027 / Depositphotos
Key players in the auto market, including Volkswagen, Mercedes-Benz and BMW, are facing serious challenges that threaten their established business models. Prices and profits in the key market of China are falling, demand in Europe is sluggish and US tariffs have created an uncertain outlook, forcing a focus on cost reductions as the global market shifts.
As Delo.ua writes, Reuters reports this.
The era of super profits is over
According to the agency, the sector is facing difficulties, compounded by pressure to switch to electric vehicles with tough targets for 2035 in Europe that many consider unattainable, even as Chinese electric car competitors are outpacing local brands with cheaper models.
“The party we have been celebrating in the automotive industry for decades is, in its current form, over,” said Oliver Blume, CEO of Volkswagen, Europe's largest automaker, and its luxury division Porsche AG.
Patrick Schaufuss, a partner at McKinsey, believes that “the coming years will be the years of truth.” He notes that European automakers must accelerate and simplify new product development to compete with fast-moving Chinese brands.
“Brutal price war” and change of strategies
European automakers are looking for new ways to survive. According to McKinsey, they plan to release 350 new electric car models by 2032. However, experts emphasize that product development needs to be accelerated and simplified in order not to lose out to agile Chinese competitors.
The Chinese luxury market, according to Porsche and Volkswagen CEO Oliver Blume, “no longer exists.” After Porsche’s sales in China fell 27.9%, he abandoned a long-term goal of a 20% margin and said Volkswagen was looking to make major investments in the United States.
Meanwhile, BMW, hoping to regain growth in China with the new iX3 model, is closely watching a “fierce price war” to decide on the price of its upcoming 2026 car.
Mercedes-Benz is launching around 40 new models by 2027, including the electric GLC, to strengthen its position in China. However, aware of “tough competition”, it is simultaneously cutting costs by billions of euros.
Renault, which withdrew from the Chinese market five years ago, is adapting its strategy, focusing on affordable batteries for electric vehicles and accelerating development — key elements of the success of Chinese manufacturers.
The market situation is forcing European giants to reconsider their strategies as competition, especially from Chinese electric vehicle manufacturers, becomes increasingly fierce.
Recall that in July, Europe's largest automaker, Volkswagen, announced losses of 1.3 billion euros for the first half of 2025 caused by US import tariffs.
