Spanish automotive components manufacturer Gestamp has warned that the decline of Europe's automotive industry could have far-reaching consequences for other industrial sectors, including steel, amid increasing competition from Chinese automakers.
Speaking to the Financial Times, Gestamp chairman and founder Francisco Riberas stated that Europe's automotive industry is facing an existential challenge as Chinese manufacturers strengthen their position in electric vehicles and European vehicle production continues to decline. According to Riberas, European vehicle production has fallen by 20-25 percent since 2017, when global automotive output peaked.
Automotive industry supports broader European industrial base
Riberas stressed that the automotive industry acts as an anchor for several other European industries, warning that losing automotive production could result in the erosion of Europe's broader industrial base. European automotive manufacturing currently accounts for approximately seven percent of the region's GDP and supports nearly 14 million jobs. While Riberas said Europe should welcome investments by Chinese automakers, he stressed that such investments need to generate local production and employment throughout the supply chain. According to him, Chinese automakers currently producing vehicles in Europe still source most of their components from China, while Gestamp has only a limited number of contracts with Chinese automakers operating in Europe.
Riberas stated that it is therefore essential for Chinese manufacturers to increasingly source locally produced components, warning that merely assembling vehicles in Europe using imported Chinese components would undermine the European automotive value chain. He noted that traditionally every job at a European vehicle manufacturing plant has supported three jobs in the region's automotive component industry. The Gestamp chairman also pointed to differences in financing conditions, arguing that European automotive companies face disadvantages compared to Chinese competitors, which he said have access to significantly more favorable financing.
Gestamp supports EU Industrial Accelerator Act
In this context, Riberas expressed support for the EU's proposed Industrial Accelerator Act (IAA), describing defensive measures as necessary to provide European industry with time to improve its competitiveness. The proposed legislation includes a 70 percent local content threshold for automotive components for investments seeking access to subsidies or public contracts, while also providing for greater scrutiny of Chinese foreign direct investments exceeding €100 million in certain strategic sectors.
At the same time, Riberas stressed that protective measures alone would not be sufficient. He called for a broader European strategy for the automotive industry, including increased investment in technology, digitalization and artificial intelligence to improve competitiveness.
