The Race to Protect: Why European Auto Suppliers are Sounding the Alarm Over Chinese Competition

Is the European automotive sector facing an existential threat, and will the EU finally implement significant trade barriers to defend its industrial heartland? That’s the urgent question following stark warnings from major component manufacturers like Gestamp, as Chinese EV and parts makers continue their aggressive European expansion. This intense market pressure, characterized by surging Chinese brand sales share, is forcing a critical re-evaluation of EU industrial strategy, impacting everything from local manufacturing jobs to the continent’s ambitious green transition goals. We are analyzing what this means for Western investors and the future of the global auto supply chain.

Spanish auto parts giant Gestamp is leading the charge, explicitly calling on the European Union for short-term protective measures against the fierce competition emanating from China in both vehicle and component markets. Gestamp’s CEO, Francisco Riberas, stated that local suppliers across Europe are facing a severe crisis and immediate action is required to preserve the native industry.

The Data: Chinese Market Share Surges Past Key Thresholds

The alarm isn’t just anecdotal; market data confirms a seismic shift. Data from analysts like Dataforce show Chinese automakers are rapidly gaining ground, with their market share in Europe climbing to 6.8% in October—a doubling compared to the previous year. This inflow of low-cost parts is pressuring European OEMs to cut costs to remain competitive.

• Sales Acceleration: Brands like BYD and Chery are registering significant sales growth in the EU.
• Component Influx: Low-cost Chinese auto components are flooding the European market.
• Wider Trade Deficit: Europe is facing a trade deficit with China in the automotive sector for the first time ever.

Gestamp’s Plea: Tariffs Beyond Just EVs

While the EU has already placed tariffs on Chinese-made Electric Vehicles (EVs), Gestamp argues this is insufficient. Riberas specifically cited a parallel EU proposal to raise tariffs on non-EU steel imports, noting that failing to apply similar measures to finished vehicles and metal components gives Chinese firms an unfair advantage by allowing them to produce components locally and export them freely.

The Tariff Dilemma: Short-Term Fix vs. Long-Term Strategy

The push for protection is heavily debated within the bloc itself. While some see tariffs as necessary breathing room, others worry about the long-term implications:

• Defense Mechanism: Riberas admitted tariffs are a “highly defensive measure” but essential until Europe can “find a new path to self-defense.”
• Internal Opposition: Major economies like Germany have expressed reservations about protectionist moves, viewing them as a step backward for free trade.
• Global Supply Chain Risk: Tariffs could disrupt global supply chains and potentially harm European manufacturers that rely on Chinese production, such as Volkswagen and BMW, whose models made in China face the new duties.

The Underlying Vulnerability: Capacity and Competitiveness

The component crisis reflects a deeper industrial contraction. Gestamp’s third-quarter results in Western Europe—its largest revenue generator—saw revenue drop 7.4% and profit plunge 21% year-over-year, attributed in part to a 3.2% decline in local light vehicle production. Riberas starkly noted that total European auto production has fallen by 4 million units compared to 2019 levels.

This situation is mirrored by broader concerns from Brussels: A European Commissioner warned that without action, annual car manufacturing in Europe could fall from 13 million to 9 million within a decade, stressing that the bloc lacks strategic industrial thinking compared to global rivals.

For the Western investor, this points to a fundamental strategic pivot. While the US is actively seeking to decouple or pressure supply chains via tariffs and third-country monitoring, the EU is caught between its decarbonization goals and the immediate need to shore up its industrial base against highly competitive Chinese exports—a challenge compounded by US-China trade tensions redirecting flows to the EU market.

Investor Takeaway: The debate over tariffs is a proxy war for industrial policy. The current focus on temporary protection for components suggests a short-term stabilization effort, but the long-term profitability will hinge on Europe’s ability to innovate past cost competition. See our analysis on EU EV subsidy investigations for related regulatory context.

Sources:

• Bloomberg, Reuters, and industry press via general search synthesis.