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Europe's Auto Industry Is for Sale - China and America Are Buying
Philipp Raasch
September 19, 2025
Welcome to Issue #85 of The German Autopreneur!
The automotive industry just won an award nobody wanted: "Most-Disrupted Industry Worldwide."
76% of executives say their industry faces massive disruption. No other sector even comes close. That's from AlixPartners' new study.
Europe is getting hit hardest. Foreign investors paid $16 billion for European auto assets in just 3 years. Another $40 billion is now for sale.
This comes from my conversation with Fabian Piontek at AlixPartners. They just released their Global Automotive Outlook study.
Here are the key insights from our conversation.
Black Swan Events Are Becoming Normal
Crises aren't new in automotive. What's new? How fast they hit.
COVID. Chip shortages. Ukraine war. These shocks now happen every 2-3 years. They used to be decades apart.
Meanwhile, Chinese competitors keep pushing for more speed.
Traditional 7-year cycles? History. Cars now need smartphone-speed development. New models every 2 years. Constant software updates. Faster innovation cycles.
The mood in the industry reflects this. Especially among suppliers. Many are selling their automotive divisions. They're exhausted by constant crises and simply giving up.
China Has Developed a New Operating Model
Chinese manufacturers aren't just playing the old game better. They've completely rewritten the rules.
The Chinese market splits into 2 camps:
Legacy players like Geely and SAIC struggle with "China Speed" just like Western manufacturers do.
New players like Li Auto or Xiaomi? They built an entirely different operating model from day one. Different speed. Different rules.
What makes the difference? A completely new playbook for vehicle development.
The Chinese Playbook:
Time is not negotiable. Chinese companies set launch dates in stone. If the car isn't ready, they launch it anyway and fix issues through software updates. Better "good enough on time" than "perfect but late.”
Empowered chief engineers. Chinese project leaders make decisions that would need 5 committees and 3 months at traditional automakers.
Standard parts rule. Why reinvent everything? Chinese companies use 80% existing components.
Higher risk tolerance. Less testing, less validation. Speed over perfection.
The result: 40-50% lower development costs and 30% cheaper production.
Why does this work? Chinese customers are different.
The average new car buyer in China is 35 years old. In Europe, it's 55.
Younger buyers care less about traditional build quality. They want great software instead.
The consequences are brutal. Europe is losing ownership of its own market.
Follow the money between 2022-2024:
$13 billion net outflow from Europe's automotive industry
$9 billion came from American investors
Foreign companies bought $16 billion of European assets
European firms invested only $1.6 billion abroad
Europe is the only region with a net outflow of $13 billion (AlixPartners)
Europe is the only region with a net outflow of $13 billion.
And it's accelerating. Another $40 billion in European auto assets are now for sale. Most are suppliers in Germany, Italy, and Spain.
Why Europe Struggles with the New Operating Model
Europe faces three big problems at once:
Risk-averse culture: Dieselgate and other compliance scandals created extreme caution. While Chinese companies use "good enough" as a strategy, German manufacturers struggle with countless validation loops. They still aim for perfection.
No convincing story: Many investors and private equity firms have completely removed combustion engine technology from their portfolios. These old stories no longer attract capital.
Slow decision-making. Traditional automakers work in rigid departments instead of fast teams. Simple decisions take months instead of days.
Technology like AI can help close the gap. But that's not enough. The real problem goes deeper.
My Take
Here's what hit me most from talking with Fabian: European automakers need new stories. The old narrative is broken.
Investors have dumped combustion technology completely. Private equity avoids automotive assets. Why? Investors bet on the future. European automakers are still selling the past.
Chinese companies tell a compelling story: Speed, software, scaling.
Americans too: AI and self-driving cars.
Europeans? They're still debating whether EVs are really the future. Maybe e-fuels? Maybe hydrogen? Maybe combustion isn't dead after all?
This isn't just about attracting money. It's about inspiring your own people. Motivating teams. Recruiting talent.
The good news: It's not too late. European automakers have the skills and experience.
What's missing? Courage for bold decisions. And a vision that looks forward, not backward.
The choice is simple: Adapt or become history.
The clock is ticking.
That's all for today.
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Until next week,
— Philipp
PS: If you find value in this newsletter, please share it with someone who might benefit. Your support helps me continue my independent work for the automotive industry.
