Auto Industry: Europe in Trouble, China in Full Speed. New Data from AlixPartners
27/10/2025
The Global Automotive Outlook 2025 paints a picture of a sector in crisis: Italian production down 54% since 2017.
Up to 5 million Chinese cars expected in Europe: in 2025, Stellantis lost more volume than Chery, SAIC, and BYD gained combined.
The problems of Volkswagen, Mercedes, and BMW. Glimmers of hope from fleets, artificial intelligence, and new business models.
European manufacturers' margins have halved in two years, and in the United States, the decline has reached 70%: a structural transformation that is bringing the auto industry to its knees.
Among carmakers, Western ones—from Volkswagen, Mercedes, and BMW to Ford, General Motors, Renault, Stellantis, and even Tesla—are facing challenges related to the electric transition, cost pressures, and competition in global markets. By contrast, Chinese groups—such as BYD, Geely (which also controls Volvo and Lotus), Great Wall, SAIC, Changan, Dongfeng, FAW, Nio, XPeng, and Li Auto—continue to advance with greater momentum, supported by economies of scale, more integrated internal supply chains, and strong government support.
"Our scenario predicts that Chinese brands could earn up to five million units in Europe over the next five years," said Dario Duse, EMEA Leader for Automotive & Industrial and Italy Country Head of AlixPartners, at the presentation of AlixPartners' Global Automotive Outlook 2025.
In the first eight months of 2025, Stellantis's volume losses alone exceeded the combined gains of its three Asian competitors—Chery, SAIC, and BYD. Yet there are glimmers of hope.
Fleets, benefiting from tax incentives, are accelerating electrification. The picture captured by AlixPartners in its Global Automotive Outlook 2025 is grim.
Automotive production in Italy has fallen by 54% compared to 2017, the last year in which domestic plants surpassed the one million vehicle mark.
Today, we're stuck at less than half a million units, far from the levels of Germany, France, or Spain. And the European figure is no consolation: overall, manufacturing on the continent is down 24% compared to pre-crisis levels.
But Italy is paying the highest price, with a structural erosion that appears to have made the decline chronic. Manufacturers' margins are following the same downward trend.
After a two-year post-Covid period characterized by exceptional profits thanks to demand exceeding supply and prices inflated by the semiconductor shortage, the picture has reversed. In the second quarter of 2025, the average profitability of European OEMs stalled at 4%, almost six percentage points lower than in 2023, while American OEMs plummeted to 1.4%.
For the first time, suppliers, with an average EBIT of 6.5%, recorded higher margins than the manufacturers themselves.
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