Why German Automakers Are Losing the Next Generation

Welcome to Issue #93 of The German Autopreneur.

BCG just surveyed over 9,000 car buyers across Europe, the US, China, and Brazil.

The findings? A massive generational shift.

The old customer base is disappearing. The new generation wants something completely different.

German automakers are caught in the middle. They're trying to serve both groups. The result? They're losing both.

Today we'll look at 5 key findings from the study. And what they mean for German automakers.

1. Chinese Brands Are Winning Acceptance

Only 7% of Americans would buy a Chinese car. In Brazil, it's 36%.

In Europe, 10-20% are open to Chinese brands. But actual market share? Just 4%.

Here's what that means: Demand is higher than supply. A massive opportunity for Chinese manufacturers.

In China, the shift is even more dramatic. 85% of buyers now choose domestic brands. Market share has hit 69%.

Foreign cars used to be the ultimate status symbol in China. Not anymore.

2. Once You Go Electric, You Won't Go Back

Customers are "sticky." They usually stick with what they know.

But EVs are different. The switch works in only one direction.

71% of current EV drivers plan to buy another EV.

For drivers of other powertrains, it's only about 50%.

Once you go electric, you stay electric.

EVs now represent 15% of new car sales, up from just 6% in 2021.

But here's the interesting part: the EV rejectors.

In the US, 28% of combustion drivers say they'll never buy an EV. Among 18-30 year-olds? Only 10%. Among those over 61? For them it’s 39%.

This rejection is generational. And it's disappearing.

In Europe, 24% reject EVs outright. In China, only 6%.

Why the rejection? BCG says it's mostly myths.

The 4 Big EV Myths:

1. "Charging takes forever" → Modern EVs add 400 km of range in 5 minutes. BMW can go from 10-80% in 21 minutes.

2. "Range is never enough" → New EVs deliver 500+ km of range. Average daily driving in Europe? Just 30 km.

3. "Too expensive" → The BYD Dolphin Surf starts at €19,990 in Germany

4. "Too little charging points" → Public charging infrastructure has nearly doubled in the last 2 years.

The problem isn't technology. It's perception.

Here's something else: Customers don't buy EVs to save the planet.

Purchase motives differ by region:

• In the US, most buy for cutting-edge technology

• In China, for features and tech

• In Europe, to save money

This means: In Europe, you win on price. In the US and China, on technology and features.

The environment? It's a factor everywhere. But never the main driver.

Buyers see EVs as technologically superior. More modern. Not as an environmental choice.

3. Brand Loyalty Is Dead

Nearly 2 out of 3 consumers plan to switch brands with their next car.

Germany still has the world's highest brand loyalty. But only half of customers stick with their brand.

In Europe and the US, loyalty drops to 40%. In China? Just 10%.

That means: 90% of the Chinese market is completely open with every purchase.

The younger the buyers, the lower loyalty.

In Europe, 50% of those over 61 stay loyal to their brand. Among 18-30 year-olds, it's only 21%.

The average age of new car buyers:

• China: Mid-30s

• Europe/US: Early 50s

The loyal generation is disappearing in Europe. In China, it's already gone.

The next generation has zero emotional attachment to traditional brands.

What matters to them: Features, price, digital experience. Not the brand.

4. Your Car Is Becoming a Smartphone on Wheels

79% of drivers with assistance systems find them helpful. Even drivers without these systems see the value. 45% say they'd be useful.

But autonomous driving still faces resistance. Two reasons stand out:

• People enjoy driving themselves

• They don't trust the technology

The most important digital factor is Over-the-Air updates. Software updates like on smartphones.

• China: 73% want OTA updates

• US: 54%

• Europe: 51%

The problem? Many cars can't do OTA updates.

BCG says:

• In China, lacking OTA capability is "fatal"

• In Europe and the US, it's a "major problem"

• Their warning: "Vehicles without OTA updates could eventually become unsellable"

For digital ecosystems, customers want choice. BCG recommends: Offer everything. Android Auto, Apple CarPlay AND your own system.

The message: Cars that aren't part of a digital ecosystem will become commodities.

5. Social Media Beats the Dealership

31% of all respondents would buy their next car online.

Among 18-30 year-olds, that number jumps to 44%. For 31-45 year-olds, it's 42%.

But here's the bigger shift: Where do buyers get their information?

• In the US, China, and Norway, social media has already overtaken dealerships as the primary source

• In Europe and Brazil, dealers still lead. But barely. 30-40% now cite social media as their main information source

So TikTok is slowly becoming more important than your salespeople at the dealership.

My Take

Here's the central insight: The generational shift isn't coming. It's here.

For years, we've talked about losing core customers "eventually." The numbers are clear. Eventually is now.

The loyal customer base is disappearing. The new generation wants something completely different.

This creates an impossible situation for German automakers.

You read everywhere:

"They're not building cars customers want anymore."

But zoom out and you see: It’s both true and not true.

German manufacturers are stuck in the middle. They're trying to please both generations.

This creates an impossible situation for German automakers.

The result? Nobody's happy.

Older buyers complain: "Too expensive. Too complicated. Too much unnecessary technology."

Younger buyers complain: "Too slow, too little features. And outdated."

Automakers see the problem. They know they need to pivot to younger buyers. But they can't let go of their current customers yet.

BCG says: The next 5 years will determine everything. The loyal, EV-skeptical generation is disappearing. The new generation is taking over.

German manufacturers must decide. Which generation are they building for?

The one that's disappearing? Or the one that's arriving?

They can't serve both. The data proves it.

🔗 BCG

That's all for today.

Feel free to reply to this email with your thoughts.

Until next week,
— Philipp

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