Corporate attendance at this year's IAA in Munich has surpassed last year's, with 750 companies from 38 countries showcasing their latest mobility products.
After rebranding the IAA as a mobility show two years ago, the automobile is no longer the focus of the trade fair. The design of the IAA also looks different. So-called Open Spaces are scattered around the city center to bring visitors and exhibitors closer together.
But of course, it's the latest car models from home and abroad that will primarily lure the expected 700,000 visitors to the auto show, no matter how inviting a newly laid bicycle path in Munich's English Garden might be for the few cyclists who may want to try out the latest two-wheelers also on display at the IAA.
Breaking Germany's dominance
The industry fair, which opened Tuesday with a speech from German Chancellor Olaf Scholz, comes as dark clouds engulf the automotive sector in Europe, particularly in Germany. While suffocating pandemic-era supply chain problems have eased, European auto giants are struggling to cope with increased energy costs following Russia's invasion of Ukraine last year.
Although sales in the European Union have steadily improved over the last 12 months, they remain around 20% below their pre-COVID levels as inflation and higher interest rates dampen appetite for new vehicles. At the same time, European manufacturers are facing increasingly stiff competition from Chinese carmakers, which are touting their vehicles at far lower prices.
German mass market manufacturer Volkswagen (VW), which used to occupy entire halls with its models in the past, has restricted its showroom space to just about 1,500 square meters (16,145 square feet) this year.
Even though the exhibition space of VW's Chinese rival BYD isn't much bigger, the Chinese firm and its compatriots will have much better cars to show for, industry analysts agree. In its home market, BYD exceeded VW's sales last year, taking the crown of market leader from the German company.
BYD broke the German dominance, especially with its battery-electric vehicles (BEVs) that, plentifully subsidised by the government, slowly but steadily won over Chinese customers and boosted its market share.
BYD and other Chinese carmakers now want to repeat their success in Europe, where legacy carmakers reigned supreme in the combustion engine era but lag far behind in the race for EV dominance. US electric-car pioneer Tesla was the first to get a foot in the door to Europe. The Chinese are now threatening to break the gates open.
BYD fires first salvo in price war
BYD, which stands for Build Your Dreams, is ostentatiously showing off its newly won market power by showcasing a range of six new models meant to premier in Europe. They include the Dolphin compact car to be sold at an entry price of below €30,000 ($32,000) – a price hardly any other EV maker is able to match.
BYD backs up its claim for electric vehicle market leader with sales of 1.8 million EVs last year, knocking Tesla off its throne not only in China but also globally.
BYD's Europe chief, Michael Shu, told reporters in Munich that BYD plans to sell 2.5 million EVs this year. Europe is set to become a major market for the company which has a presence in 15 countries on the continent, including 17 showrooms in Germany.
In Munich, Shu stunned auto analysts by announcing a price tag of less than €45,000 for its SEAL compact executive fastback sedan, a price that may cause VW executives to break out in sweat.
Still VW sells more EVs in Germany than BYD or any other carmaker. But BYD has launched a price war in Europe that is challenging, if not threatening, legacy carmakers.
VW countered the Chinese offensive by announcing that it will launch its own models in two years, with entry-level prices starting at €25,000. Asked if he was worried about the new competitors, VW CEO Oliver Blume told reporters that "fear is a false advisor," and added that VW was focusing on its strengths and would counter the Chinese with confidence.
"I think we have huge opportunities. We have great experience, we know how to build cars," said Blume.
The dawning of new era
BYD has a technological edge over German carmakers, as it's building more efficient batteries, without cobalt and nickel, at lower prices. VW has to rely on numerous cooperative ventures to source its batteries. The Germans are also lagging behind when its comes to state-of-the-art automotive software.
In all, 41% of exhibitors at the auto show have their headquarters in China. Contrary to the Asian onslaught, participation from other European automakers is underwhelming. Philipp Kemmler, head of European communications for Chinese automaker Great Wall Motor, told DW that Chinese carmakers tend to believe that "if you can make it in Germany, you can make it anywhere."
Another auto expert, Stefan Bratzel from the Center of Automotive Management (CAM) in Bergisch Gladbach, Germany, thinks the Chinese will have a "big impact" on the European auto market in the coming years.
As carmakers roll out their latest offerings, climate groups have vowed protests at the fair, including "civil disobedience" aimed at disrupting the IAA. The last edition of the show in 2021 was also troubled by small-scale protests.
Edited by: Ashutosh Pandey
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September 06, 2023 at 01:13AM
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IAA auto show welcomes new contenders to EV market race - DW (English)
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