China imposes tariffs on European cars – A disaster for manufacturers?

 
Even before the temporary import duties on Chinese electric cars into the EU were introduced, European carmakers were concerned that China would react with countermeasures. These fears now appear to be coming true, as China is targeting foreign carmakers with possible import duties on combustion vehicles.
 
As announced on Friday, the Chinese Ministry of Commerce has consulted experts and representatives from industry associations and sectors to gather opinions and suggestions on increasing tariffs on imported combustion cars with large engines. The ministry did not comment on the participants or the results of the meeting.
 
In May, the Chinese Chamber of Commerce in Brussels had already warned of possible countermeasures in the face of the then impending European additional levies. According to insiders, affected vehicles could be subject to a 25 percent tariff.
 
This measure would have ‘an impact on European and US carmakers, particularly in light of recent developments,’ the chamber said at the time. In Europe, German and Italian carmakers would be particularly affected, as their vehicles fall into the ‘large combustion engine’ segment. This includes brands such as BMW, Mercedes-Benz, Volkswagen (ETR:VOWG_p) (in-house mainly Audi, Lamborghini and Bugatti), Porsche (ETR:P911_p), Ferrari (NYSE:RACE) and Stellantis (in-house mainly Alfa Romeo, Maserati, Abarth and the US brands such as Jeep, Dodge and Ram).
 
The end of the golden era for European carmakers?
 
Let's put it this way: everyone was surprised by the strength and quality of Chinese carmakers and in some places even overwhelmed. But every crisis also presents an opportunity. Precisely because the pressure from China is growing daily, European carmakers can no longer rest on their laurels of yesterday. This will ensure more and accelerated innovation. The only problem is that there will be upheavals in the short to medium term that will not leave the employees unaffected.
 
Almost all of the stocks of the above-mentioned manufacturers are still pointing downwards. We believe it is too early to buy at this point in time. The problems are simply still too big and the approaches to solving them – if there are enough of them at all – are still too new.
 
The following graphic shows a direct comparison of the carmakers:
 

 The prices show the profit/loss since the IPO
 
The clear loser is Porsche, which is down significantly. However, this is because the stock is still very young and young stocks always do the same: they rise briefly and then fall below the issue price, and only then does the journey continue. We note that BMW and Ferrari are by far the clear winners.
 
Even though the corrections are not yet over for most carmakers, we should not make the mistake of losing sight of the European carmakers now. We already know that the corrections will pass, and even when and where exactly the most likely areas for a sustained turnaround are.
 
Daily analyses of car manufacturers (and of course a wide range of other stocks from other sectors) can be found on our website in the customer area. And since trust is good, but testing is even better, you should not miss the opportunity to test our professional package. You can do so for a full 14 days completely free of charge and without obligation. Just click on the link above this text next to my profile picture.
 
And how are politicians reacting to the threat from China?
 
The US has already imposed high punitive tariffs on Chinese electric cars. In the EU, however, it is still unclear whether corresponding measures will follow. The European Commission has to make a decision on this, which will be voted on by the 27 EU member states. A final clarification is expected by the end of October.
 
China has strongly criticised the EU for its actions, accusing the Union, among other things, of protectionism and of disregarding the interests of European consumers. At the same time, China is scrutinising imported goods from the EU as part of anti-subsidy investigations, including spirits, pork and certain dairy products. In doing so, China is exerting strategic pressure on European governments.
 
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