fromThe Conservative Treehouse:
How do you sum up the economic forecast for Europe? This story highlights one of the craziest stories in a long time. This is so blindingly suicidal, it cannot be stupidity. This is intentional.
BACKGROUND– You might remember last year due to climate/carbon emission regulations inside Europe EU automakers had to pay fines to the EU Commission if they did not meet electric vehicle targets. In order to avoid the penalties many EU automakers began purchasing ‘carbon credit’ offsets from Chinese EV automakers.
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European car makers were paying China for carbon credits, and Chinese car companies began using the payments to lower prices. Europe was, essentially, paying China to undercut their own auto market. The result was European car makers, specifically those in Germany, losing market share to lower price EVs from China. German industry began shrinking.
If that wasn’t crazy enough, what comes next is beyond laughable. As a result of lost sales and diminished volumes, Volkswagen had shut down auto plants. Now, Volkswagen is announcing that Chinese automakers, their China “partners,” will take over the underutilized facilities and start building Chinese cars in Germany.
GERMANY– Volkswagen Group is facing increased pressure from its board to further cut costs despite already announcing radical measures, such as axing around 50,000 jobs in Germany by 2030 and reducing production capacity by up to 3 million units per year to 9 million, which would make it very difficult to avoid plant closures or sales. Overall, Europe’s largest automaker aims to reduce costs by 20% by the end of 2028.
In an attempt to mitigate the effect of these measures, the automaker appears ready to do what not too long ago would have seemed unthinkable, namely selling China-developed cars in Europe and even sharing its underutilized plants in the region with its Chinese partners.
That’s what CEO Oliver Blume told investors and analysts on April 30 after presenting the company’s first-quarter 2026 results, which saw the automaker’s profit drop 14% to $2.92 billion amid higher U.S. tariffs and intense competition from Chinese carmakers.
In order to deal with excess capacity in Europe and rising competition from Chinese brands in Europe in the coming years, Blume said VW Group is considering selling China-built cars in Europe. It’s the first time that Volkswagen has acknowledged it is contemplating such a move. (read more)
Source: SGT Report
