Automotive Industry Faces Reckoning as Global Market Shifts

As of September 9th, 2025, the automotive industry is undergoing a significant shift, with the once-booming sector now facing a reckoning. The buzz and excitement of the latest car models and bright lights at Europe's largest car show in Munich have given way to a sense of unease, as the industry grapples with a changing global landscape.

The primary concern is the decline in prices and profits in the key Chinese market, which has long been a driving force for the industry. Demand in Europe has also been tepid, while US tariffs have created an uncertain outlook, forcing automakers to focus on cost-cutting measures.

"The party we have been celebrating in the automotive industry for decades is over in its current form," said Oliver Blume, the CEO of both Volkswagen, Europe's biggest carmaker, and its luxury division Porsche AG. "Now it is about reorientation."

The industry is also facing pressure to shift towards electric vehicles (EVs), with tough 2035 targets in Europe that many feel they cannot meet, even as Chinese EV rivals steal a march on local brands with lower-cost models. In response, Volkswagen, Mercedes-Benz, BMW, Porsche, and Renault have rolled out a range of new EV models, from affordable entry-level options to luxury SUVs.

By 2032, European automakers plan to launch an unprecedented 350 new electric vehicles, according to McKinsey, as they race to stay ahead of a looming ban on combustion engine autos in the EU from 2035, which Germany's carmakers oppose.