Volkswagen chief backs EU 'Made in Europe' plan to counter Chinese rivals

Oliver Blume, chief executive of Volkswagen, said the proposed rules, formally known as the Industrial Accelerator Act, would limit subsidies and public procurement to products with a large proportion of their materials and manufacturing coming from within the EU.

The measures are aimed at countering the rapid rise of Chinese brands in Europe, in the automotive sector and other important manufacturing industries. Lower-priced Chinese manufacturers have prompted a crisis in several industries, with Volkswagen among the most affected European companies. Germany's biggest carmaker has launched a plan to cut as many as 100,000 jobs, which Blume described as the largest transformation programme in its history.

Speaking in Paris before the motor show, Blume listed a litany of challenges facing European carmakers, saying Europe is under enormous competitive pressure. These included high energy costs, lower demand as consumers struggle with high inflation, the need to be quicker to develop cars, and intense competition from China.

The comments come after the EU said on Friday that it had reached a landmark deal with China to halve its sales of hybrid cars in the bloc, amid fears that surging sales could kill off parts of the European car industry.

Blume said Germany's carmakers were happy to compete with Chinese rivals but argued the EU should try to reward businesses with significant European footprints. Companies that invest and develop in Europe must see a clear benefit, he said, adding that those who sell in Europe should compete under comparable conditions and create jobs and value in Europe too.

Analysis

Why This Matters

The EU's Industrial Accelerator Act would reshape how subsidies and public procurement favour European-made products, directly affecting automakers, suppliers and consumers across the bloc.
Volkswagen's backing gives political weight to the proposal, but the company's own 100,000-job cut plan shows how severe the competitive pressure already is.
The deal to halve Chinese hybrid sales signals Brussels is moving from rhetoric to action on protecting domestic industry.

Background

European carmakers have faced growing competition from lower-priced Chinese manufacturers, who have gained market share rapidly in the bloc. The pressure has been compounded by high energy costs and weak consumer demand tied to inflation. The EU's response, beyond the hybrid deal with China, is the Industrial Accelerator Act, which would direct subsidies and public procurement toward products with substantial EU content. Volkswagen, deeply exposed to Chinese competition, has begun a large workforce reduction as it restructures.

Key Perspectives

Oliver Blume / Volkswagen: Supports the Made in Europe rules, arguing they must reward real value creation and that companies investing in Europe should see a clear benefit, while insisting German carmakers are willing to compete with Chinese rivals on level terms. EU officials: The proposals are designed to counter surging Chinese imports and protect important manufacturing industries, with the hybrid deal marking a negotiated first step. Critics and skeptics: Restricting procurement and subsidies to European-made products could raise costs and limit consumer choice, and it remains unclear whether Chinese firms will create jobs in Europe in exchange for market access.

What to Watch

The details and timing of the Industrial Accelerator Act as it moves through the EU legislative process.
Whether China honours the agreement to halve hybrid sales, and how that affects market share data in coming months.
The scale of Volkswagen's job cuts and whether they deepen as the transformation programme proceeds.

Analysis

Why This Matters

Background

Key Perspectives

What to Watch

Sources