For decades, European automakers dominated the global car market — but that dominance is now eroding fast. According to an analysis by Ernst & Young (EY), reported by Germany’s Der Spiegel, the European Union imported more cars and auto parts from China last year than it exported there for the first time ever. EU exports to China fell 34% to €16 billion (roughly $17.4 billion), having been cut in half since 2022, while imports from China rose 8% to €22 billion (roughly $23.9 billion). A trade surplus once worth tens of billions of euros has flipped into a deficit in just a few years.
German automakers are feeling the pressure too. Exports to China have dropped from a record €30 billion ($32.6 billion) in 2022 to €13.6 billion ($14.8 billion), while imports from China have grown by two-thirds to €7.4 billion ($8 billion). EY warns that if current trends continue, exports and imports could reach parity by 2026. Chinese brands have yet to make major inroads in Germany itself — Volkswagen, Mercedes-Benz, and BMW have held their ground — but they have advanced significantly elsewhere in Europe, and further competitive pressure is expected.
The troubles extend beyond trade balances. Germany’s auto industry saw revenues fall 1.6% in 2025 to nearly €528 billion ($574 billion), with profits declining sharply in some cases. Employment dropped 6.2%, or nearly 50,000 jobs, to around 725,000 — the lowest level in 14 years. Major layoff plans are underway at Mercedes-Benz, Volkswagen, and suppliers including Bosch and Mahle. Suppliers have fared even worse, with revenues down 4% and employment falling more than 10%. Since 2019, nearly one in four supplier jobs has disappeared — some 73,000 positions in total.
EY attributes the crisis to a combination of rising Chinese competition, weak export markets, sluggish economic growth, geopolitical instability, and underwhelming electric vehicle demand, compounded by Germany’s high operating costs and bureaucratic hurdles.
Source: Radio France International, March 21, 2026
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