Allianz Study: Europe's Auto Crisis Self-Inflicted Due to Capital Misallocation
An Allianz Trade study reveals Europe's automotive crisis stems from two decades of misallocated capital, with carmakers losing market share to Chinese competitors as they delayed EV investment.
Newsnibs Staff
- 2026-10-09
- Updated 5:31 PM UTC
A new study from Allianz Trade, the credit insurance arm of the Munich-based insurer, finds that Europe's automotive industry is facing a crisis of its own making. The study, released Friday, says European car companies cut their investments by 20% this year even as other large European companies with big market capitalizations increased investments by 10%. It was timed to land ahead of the Paris Motor Show, which opens Monday.
The study traces the sector's decline to two decades of capital misallocation. European carmakers poured money into conventional combustion-engine technology, favoring short-term returns and dividends over early bets on electrification and digitalization. When capital eventually shifted, it was spread thin. Guillaume Dejean, an automotive and industry expert at Allianz Trade, described the pattern as a "watering-can approach across too many projects" and called the result "a boomerang that is now coming back."
The numbers in the study are stark. Value added per car sold in Europe has dropped 30% to 45% since 2021-22. European carmakers have lost an estimated 10% of market share in Europe and 7% in China. The share of European exhibitors at the Paris Motor Show has fallen to 40%. Milo Bogaerts of Allianz Trade warned that if German manufacturers lose another three percentage points of share each in Europe and China by 2030, roughly €3 billion, or $3.37 billion, in added value would be at risk.
The study also warns European policymakers against diluting the combustion-engine ban originally planned for new vehicles starting in 2035 unless they replace it with a binding roadmap, arguing that doing so would let domestic carmakers fall further behind Asian rivals. It argues the sector could still halt its decline by investing wisely, particularly in software and digital services, and points to one bright spot: in the segment below €50,000, European electric cars now offer a better price-to-range ratio than Chinese electric cars, with small and urban European models more competitive than previously assumed.
Chinese manufacturers' share of new vehicle registrations in Europe reached just under 10% by midyear, and their share of EV sales hit 16%. Twenty Chinese manufacturers will exhibit at the Paris show, double the number in 2024. Brad Kunz of Grant Thornton Stax said the US market remaining closed to Chinese cars has intensified the competitive pressure on Europe.
The pressure on Chinese manufacturers isn't easing at home. Mobility Global expects China's domestic vehicle sales to fall to 22.6 million this year, 4.7 million fewer than in 2025, with no recovery to 2025 levels expected until 2031. Henner Lehne, head of forecasting at Mobility Global, said the trend represents "deterioration rather than an improvement."
At the Paris show, Stellantis will present the electric Duck and Volkswagen will unveil the electric Tiguan.
Photo by Lenny Kuhne on Unsplash
