Europe’s automotive battle with China is moving from a distant strategic concern to a fight playing out directly in showrooms. Volkswagen Group CEO Oliver Blume is urging European policymakers to create stronger conditions for domestic manufacturing as Chinese automakers rapidly increase their presence across the continent.
Speaking in Paris on October 11, Blume argued that Europe’s carmakers must become more competitive themselves, but governments also have a role in maintaining fair competition. His appeal comes as Volkswagen undertakes the largest transformation program in its history, Chinese brands capture a growing share of European sales, and Brussels experiments with tariffs, local-production incentives and negotiated limits on Chinese vehicle exports. The issue is no longer simply whether Europe can build electric cars. It is whether those cars can be produced profitably enough to preserve one of the continent’s most important industries.
Blume Says Europe’s Carmakers Cannot Fight Alone
Blume delivered his message at Volkswagen’s “For Europe” event in Paris on the eve of the Paris Motor Show. His argument stopped short of saying policymakers should rescue manufacturers from competition. Instead, he described the transformation as a shared responsibility: businesses need competitive products and lower costs, while governments need to establish conditions that allow European manufacturing to remain viable.
That distinction is important. Volkswagen is simultaneously asking for policy support and carrying out deep changes within its own operations. Blume says the company is simplifying products, processes and corporate structures while concentrating investment on technologies capable of generating stronger returns. At the policy level, Volkswagen wants rules that reward genuine European value creation and create comparable conditions for companies selling into Europe. In practical terms, the company’s position is that foreign manufacturers should be free to compete, but European policymakers should consider where vehicles are produced, where jobs are created and how much economic value remains within the region.
Chinese Brands Have Doubled Their European Share
The competitive threat can now be measured in actual registrations rather than future projections. Data cited by Reuters from Schmidt Automotive Research showed Chinese brands capturing 10.7% of the European car market during the second quarter of 2026. A year earlier, their share was 5.7%. In only 12 months, Chinese manufacturers therefore came close to doubling their presence in one of the world’s largest and historically most difficult automotive markets.
The Paris Motor Show provides another visible measure of that expansion. A record 20 Chinese brands are expected at the 2026 event, twice the number that participated in 2024. Established exporters such as BYD and Chery will appear alongside less familiar names including Aito and Avatr. That matters because competition increasingly involves more than inexpensive cars appearing online. Chinese companies are establishing distribution networks, marketing directly to Europeans and placing vehicles beside Volkswagen, Renault, BMW and Stellantis products at major industry events. Europe is becoming a primary global battleground rather than a secondary export destination.
Plug-In Hybrids Have Opened a New Front
Europe already responded to China’s electric-car expansion with additional countervailing duties on Chinese-built battery-electric vehicles. The measures introduced after an EU anti-subsidy investigation remain in force for five years, with company-specific rates ranging from 7.8% to 35.3%. BYD was assigned a 17% duty, Geely 18.8% and SAIC 35.3%. Yet those measures have not prevented Chinese automakers from finding other routes into the market.
Plug-in hybrids illustrate the problem. Chinese brands accounted for more than 26% of Western European plug-in-hybrid sales during the second quarter of 2026, compared with only 2.2% two years earlier. ACEA separately reported that Chinese manufacturers held 25% of Europe’s plug-in-hybrid market during the first half of the year, versus roughly 2% in 2024. Manufacturers can therefore compete aggressively with powertrains not covered in the same way as Chinese battery-only EVs. For European policymakers, trade defence increasingly resembles a moving target rather than a single tariff decision.
Europe and China Have Now Negotiated a Hybrid Deal
Days before Blume’s remarks, the European Union and China reached an understanding intended to reduce Chinese exports of hybrid and plug-in-hybrid vehicles to Europe. EU Trade Commissioner Maroš Šefčovič said the agreement could cut such exports by more than half and eliminate several million projected vehicle shipments over four years. The arrangement followed months of negotiations as European governments became increasingly concerned about rising imports and falling vehicle prices.
The numbers explain that urgency. Imports of plug-in hybrids into the EU increased 86% in the year through September, while prices declined approximately 20%. More than half of those imported vehicles were coming from China. Blume welcomed the agreement, but European officials have cautioned that it represents a first step rather than a complete solution to trade imbalances. The mechanism also reflects Europe’s attempt to avoid an uncontrolled escalation in tariffs. Policymakers are trying to limit destabilizing import growth while preserving a commercial relationship with China that remains enormously important to European manufacturers themselves.
“Made in Europe” Could Become a Competitive Tool
Blume has also backed the European Commission’s proposed “Made in Europe” approach. The Commission introduced its Industrial Accelerator Act in March 2026, proposing European-content and low-carbon requirements for certain public procurement and financial-support programs. Cars are among the strategic sectors covered. The goal is not simply to block imported products but to use government spending and incentives to increase demand for products that generate manufacturing activity within Europe.
For a family purchasing a privately financed vehicle, those rules might initially seem distant. Their larger effect, however, could influence where companies decide to assemble cars, manufacture batteries or source components. A Chinese automaker seeking access to European incentives could gain a reason to establish more production locally rather than shipping finished vehicles from China. The proposed regulation still requires negotiations and approval by the European Parliament and EU member states, so its final shape is not settled. Volkswagen nevertheless sees local-value requirements as one way Europe could connect industrial policy directly to employment and investment.
Volkswagen Is Cutting Costs at the Same Time
Blume’s appeal would be difficult to defend if Volkswagen were relying exclusively on government intervention. The company is instead pursuing major internal restructuring. Volkswagen says approximately 50,000 positions are already scheduled to disappear by 2030 across Volkswagen, Audi, Porsche and software subsidiary CARIAD in Germany, primarily through voluntary arrangements and partial early retirement. More than 35,000 of those positions relate to Volkswagen AG itself under previously negotiated agreements.
Manufacturing capacity is also under scrutiny. Volkswagen’s Future Plan 2030 states that the group currently has more than 500,000 vehicles of excess production capacity in Europe. The company says competitive future production assignments cannot currently be guaranteed for plants in Emden, Zwickau, Hanover and Neckarsulm as existing allocations expire between 2031 and 2034. Alternative uses are being examined. Those measures underline Blume’s “shared responsibility” argument: protecting European manufacturing does not mean preserving every existing cost or structure. Volkswagen is asking policymakers for help while simultaneously acknowledging that its own operations must become leaner.
Volkswagen Is Also Losing Ground Inside China
Chinese competition is especially uncomfortable for Volkswagen because China was once one of the company’s greatest sources of growth. In the first half of 2026, Volkswagen Group deliveries in China fell 25.9% to approximately 973,000 vehicles. Its battery-electric deliveries there declined 47.9%. Volkswagen said the broader Chinese vehicle market was also sharply weaker, but the figures demonstrate how difficult the environment has become for long-established foreign manufacturers.
Europe produced almost the opposite picture. Volkswagen Group deliveries in Western Europe increased 2.9% in the first half, while European battery-electric deliveries grew 8.4% to 377,000 vehicles. That means Volkswagen is defending its strongest home territory at precisely the moment Chinese manufacturers are expanding outward. It also explains why Europe matters beyond simple nationalism. If a company loses market position in China while simultaneously surrendering customers at home, its ability to finance new factories, software platforms and future vehicles becomes progressively harder. Protecting competitiveness in Europe is therefore closely connected to Volkswagen’s global turnaround.
Volkswagen Is Fighting Back With Smaller European EVs
Policy is only one side of Volkswagen’s response. The other is producing cars capable of competing directly with increasingly affordable Chinese models. In Paris, Volkswagen presented all four vehicles from its Electric Urban Car Family together: the Volkswagen ID. Polo and ID. Cross, Škoda Epiq and CUPRA Raval. All are based around a common technical approach and are intended to improve the group’s economies of scale in the mass-market electric segment.
More than 80% of the components and technologies are shared across the four vehicles, while production is concentrated at Volkswagen Group plants in Martorell and Pamplona, Spain. Volkswagen said the family had accumulated almost 150,000 orders by the Paris event. Sharing hardware is central to the economics. Instead of four brands developing four mostly independent small electric cars, common technology can spread engineering and manufacturing costs across a larger number of vehicles. That approach resembles one of the major advantages Chinese automakers have developed: speed, scale and a willingness to reuse technology aggressively across products.
Europe Has Too Much at Stake to Ignore the Fight
The policy debate extends far beyond Volkswagen shareholders or German factory workers. The European Commission estimates that approximately 13.8 million people work directly or indirectly in the EU automotive sector. Manufacturing alone accounts for roughly 3.5 million jobs, while sales, maintenance, transportation and related activities support millions more. Automotive industry turnover is equivalent to more than 7% of EU gross domestic product.
Those figures help explain why governments treat automotive competitiveness differently from the fate of an ordinary consumer product. A vehicle assembly plant supports suppliers producing steel, electronics, chemicals, plastics, seats, glass and software. Towns can develop around factories that employ generations of the same families. If production moves elsewhere, the economic impact can spread well beyond the badge on the vehicle. At the same time, preserving jobs indefinitely through protection alone carries its own risks. Policies that remove competitive pressure can make local companies less efficient. Europe therefore faces the much harder task of supporting industrial capacity without sheltering manufacturers from necessary change.
Protection Alone Will Not Determine Who Wins
Europe’s transition toward electric vehicles is already accelerating. Battery-electric cars accounted for 21.7% of new EU registrations during the first eight months of 2026, up from 15.8% during the comparable period a year earlier. Hybrid-electric vehicles represented another 36.6%, while plug-in hybrids held 10%. The market is clearly moving toward electrification, but European brands no longer control that transition by default.
That is why Blume’s message contains two parts. Volkswagen wants policymakers to defend European industrial value through trade rules, manufacturing incentives and competitive energy and regulatory conditions. Yet the company also knows customers ultimately decide the result. Tariffs cannot make an unattractive vehicle desirable, and local-content requirements cannot compensate indefinitely for cars that cost too much or arrive too slowly. Chinese competition has raised the standard on affordability, technology and development speed. Europe can create breathing room for its manufacturers, but Volkswagen and its rivals still have to use that room to build vehicles customers choose without needing protection to persuade them.
