Mercedes says its German plants are no longer competitive as China's rise squeezes European carmakers
Mercedes-Benz said this week that production at some of its German plants has become uncompetitive, with two facilities under explicit threat of closure, as a European Central Bank study found China's industrial rise is hitting German manufacturers harder than almost any other sector. Volkswagen's China chief added to the gloom, forecasting the Chinese passenger-car market itself will shrink by 20% in 2026 as domestic Chinese brands consolidate their dominance of the world's largest auto market, a shift that has eroded the profits European carmakers once relied on from Chinese sales to subsidize operations at home. The crisis has pushed European auto executives to look, with some irony, to the continent's rearmament drive as a possible industrial lifeline — converting idled automotive capacity and engineering talent toward defense production — a sign of how deeply China's manufacturing rise is now reshaping strategic thinking in an industry that long defined German economic identity.
