14.12.2021
Daimler and BMW constantly strengthen their relationships with the asian market, especially China. Why do they do so even when the political systems are so different?
This morning one could wake up and read two essential news for the automotive industry in the German economic newspaper Handelsblatt.
First BMW: The german manufacturer will move its production of the X5 from the Spartanburg plant in the US to the BMW-partners production site in Shenyang, China. The future full electric series 3 model will be produced in Shenyang as well.
Second Daimler: The Beijing Automotive Group (BAIC) holds Daimler shares of 9,98%. Combined with Geely Founder Li Shufu's shares nearly 20% of the german manufacturer are in chinese hands.
BMW Production Plant in Spartanburg (USA) producing the X-series
Daimler presence in Beijing
Both news show a major shift towards the asian economy. The simple answer to the why question would be that there is more money to earn in China. This comes from a variety of factors. The USA are moving towards a bigger protectionism which leads to high export taxes towards Europe and China making production for non-US manufacturers very unattractive. On the other hand the asian market is the only one which didn't stagnate the last years and is probably going to evolve over the next years even further. Around 400 million people are predicted to move out of poverty in to the middle class - all potential costumers for the automotive industry.
This explains on a very basic level why economically it makes sense for European manufacturers to engage with the asian market. One shouldn't forget that this also raises question about a potentially to high dependency of China and its political system which differentiates a lot to our understanding of rights and moral. How politically these events will be seen in the future and will certainly in a way define what is more important for the EU - economic power or moral correctness. This is a complicated and delicate act of balance between politicians and managers.
Why is this relevant for the Generation Z?
In my opinion this short article shows the challenges lying ahead of our generation concerning economic development and political power. We will have to find a good balance between both.
Looking at Mobility we may will have to get used to the fact that our industry is not mainly serving our local markets but has to have a global presence. We could see this development also as chance to influence product wise other markets for example regarding climate change and emissions. Due to exporting our technical know-how we can improve the CO2 footprint way further than the European frontiers.
What does this mean for the automotive industry?
For the automotive industry it probably means that over the next decades the industry won't be defined by the European mobility concept and rather by the asian market due to shrinking population and therefore sales in Europe. To still remain leaders in worldwide production of cars, manufacturers will have to concentrate on the main retail markets and their demands. Making for example a certain model range only available in China very possible. Strategically looking at the political developments in my opinion it could be wise to concentrate on every market on its own regarding offerings and production. Resulting in a local production of highest demand models in the respective country to avoid taxes and serve costumers all around the world at competitive prices. The development and strategic power could stay in European hands without losing costumers due to a political trade war.
Written by: Maxime Schönberg
Sources: Handelsblatt ; www.press.bmwgroup.com ; www.daimler.com