European Carmakers Face Crisis with Models at Munich Show
By Reuters | 08 Sep, 2025

Faced with tariffs, surging Chinese imports and shrinking China sales, European automakers unveil cheaper new models designed to compete against Chinese imports.

Major automakers showcased their latest models at the Munich car show on Monday, unveiling new EVs and lower-cost models as Europe's auto sector fights crises ranging from tariff hikes to rising costs and rivalry with Chinese firms on their home turf. 

With many companies concerned over Europe's tough-to-meet carbon emissions targets for 2035, several said they would widen their production focus rather than restrict themselves to electric or other alternative-fuel vehicles.

European automakers at the IAA Mobility show in Munich, running until Friday, also face sinking sales in China, the biggest single market for Volkswagen, BMW and Mercedes-Benz.

"The main problem is that we have many crises at the same time," VW Chief Executive Oliver Blume told Reuters, citing challenges in China, U.S. tariffs and a huge price tag if restructuring is part of the firm's cost-cutting drive.

Still, automakers appeared to now be confronting Chinese competition head on, some analysts said.

European automakers are showcasing a number of new models this year, after learning their lesson two years ago when they did not have any new models to counter the Chinese onslaught, said Tu Le, founder of consultancy Sino Auto Insights.

"The Europeans have demonstrated that they are absolutely taking the Chinese seriously," he told Reuters. 

COSTLY TARIFFS

VW's Blume said U.S. tariffs were costing the firm "several billion euros on our balance sheet" this year. 

Still, he said Volkswagen was in positive talks with the U.S. government over substantial investments to mitigate the impact of tariffs, including a plant for its Audi brand. 

VW's luxury sportscar brand, Porsche, meanwhile, was unlikely to reach its 20% long-term margin target as it was "sandwiched" between tariffs and a weak Chinese market, said Blume, who is also CEO of Porsche. 

Franco-Italian carmaker Stellantis will no longer only produce EVs as part of its target through 2030, Jean-Philippe Imparato, head of enlarged Europe and European brands, said during a roundtable at the auto show.

Imparato cited EU carbon emissions targets for 2035 as no longer achievable for any carmaker, adding weight to Stellantis' decision not to restrict production just to EVs.

With high price tags a barrier to broader EV adoption in Europe, automakers have been racing to bring models priced under 25,000 euros to the market.

NEW OFFERINGS

China's Leapmotor unveiled the B05, a new hatchback model, adding to its EV lineup in Europe as competition heats up for affordable electric models.

The B05 will be delivered in Europe from the second quarter of 2026 after its launch in China in the fourth quarter of this year, the company said, without disclosing price details.

CEO Zhu Jiangming described the model as a sporty coupe that will come in six colours, including Lightning Yellow and Morgan Pink.

Turkish EV startup Togg unveiled a new sedan and said it would launch sales in Europe starting with Germany as it sought new profit avenues in the region's largest car market.

Togg announced the European launch of its T10X electric SUV, and unveiled the T10F, an electric five-door sedan. Orders for both vehicles will start in Germany at the end of September and pricing details were not disclosed.

(Reporting by Nick Carey and Christoph Steitz; Editing by Bernadette Baum)