European Automotive's Slow Suicide: This Is How Great Industries Die

I've spoken about this at length for a long time now, so we now need to just cut through the corporate speak and PR rubbish. When 大众 – one of the biggest European automotive companies – reports a disappointing 5.4% operating margin and starts begging for "urgent cost reductions," something is seriously wrong.

But here's what really annoys me: Everyone's tiptoeing around the truth. Nobody wants to say it out loud. So I will.

The European automotive industry is dying. Not struggling. Not "facing challenges." Dying.

Think I'm being dramatic? Let's talk about what's really happening in 2024.

Remember when we thought the post-COVID recovery would save us? Yes, car sales are up 4.6% across major European markets. UK's up 6%, Germany's following at 5.4%. Sounds good, right?

Wrong.

We're selling more cars but making less money.

That's not a business strategy – that's a going-out-of-business strategy. The numbers tell the story. Monthly payments for new cars have shot up 6.1% since January. In Italy, people are paying €1,393 monthly for new cars. The Netherlands? From €1,160 to €1,420 in six months.

But costs are rising, competition is intensifying, and we can't raise prices enough to cover the difference. We're essentially selling more cars at a discount just to keep the machines running.

And the most painful thing is that we bet the everything we have on electric vehicles, but market's giving us a serious reality check. Regulations, and infrastructure were not in place, we ran before we could walk.

That massive price gap between EVs and traditional cars is now disappearing. From €201 to €80 in months. Tesla's Model Y sales have dropped 23% this year. This is a strong message from the market that we got it wrong.

Unfortunately there is more.

While we're congratulating ourselves for our "premium" brands and "superior engineering," Trump's threatening 10% tariffs on everything we ship to America. Our stocks dropped massively – 4% to 7% across the market. And China? They're not just coming. They're here. With cheaper cars, lower standards, and a plan to eat our lunch.

The worst part? Our solution is to do more of what's not working. "Insanity is doing the same thing over and over again and expecting different results."

It seems to me that nobody in the industry wants to admit that our entire business model is outdated. We're building cars like it's 1990 while pretending it's 2025. We're damaging ourselves with our own complexity, our own bureaucracy, our own inability to see the world as it is.

Premium brands pricing power is decreasing, as they increased prices by 10% this year, down from 29% in 2023. That's not a strategy – that's desperation. We're squeezing the last drops out of a dying business model.

The European automotive industry as we know it is finished. Not because we can't build great cars. We can. Not because we don't have talented people. We do. We're finished because we refuse to change fundamentally.

We're like Kodak in the digital age, Nokia when the iPhone launched, Blockbuster when Netflix started streaming. We see the future coming, but we think we can meet it with incremental changes to our past.

Here's what needs to happen:

• Stop pretending premium pricing will save us
• Admit our EV strategy needs a complete rethink
• Face the Chinese threat head-on
• Rebuild our entire approach to innovation

But will we do it? Our history doesn't encourage me. Right now, we're watching Europe's automotive giants sleepwalk into irrelevance. VW's results aren't just numbers on a page – they're a real signal of something fundamentally wrong.

The really scary part isn't just the cars, I'm worried about Europe's industrial future. When our biggest manufacturers start failing, we don't just lose jobs – we lose our industrial lifeline.

I know that people will say this view is too harsh, too negative, as they always point to new models coming, to slight improvements in sales, to promises of future technology. But I think they might be missing my point. We are spending too much time congratulating ourselves on our past successes and not worrying enough about how we can survive in a world that is rapidly changing. It is better to be honest, look at what is really going on and tackle that, make tough decisions, and move forward.

Prove me wrong. Please. Because right now, we're not just losing the game – we're playing the wrong game entirely.

Agree? Disagree? Let me know. I always think the uncomfortable truth is always better than a comfortable lie.