Carlos Tavares, the CEO of a prominent automotive manufacturer, is facing challenges as competition from Chinese automakers continues to rise in Europe.
Factory Closures is Possibility
In a recent interview with Les Échos, Tavares indicated that he is open to the possibility of closing factories as the market landscape shifts. He reiterated these comments on RTL, emphasizing the growing pressure from Chinese companies in the European automotive sector, according to L'Independent.
Tavares expressed concerns about the impact of closing borders to Chinese products, stating that such measures would be counterproductive.
He pointed out that Chinese manufacturers could circumvent tariffs by investing in European plants, which could be partially funded by state subsidies in lower-cost countries.
Starting at the end of October, vehicles imported from China will be subject to tariffs as high as 45%, adding to the urgency of the situation.
Ajusted Profit Margin Targets
To maintain competitiveness, Tavares warned that if Chinese brands capture 10% of the European market, it could mean a loss of up to 1.5 million vehicles, translating to the closure of around seven assembly plants. This stark reality highlights the necessity for strategic measures to protect European manufacturing jobs.
While Volkswagen has already signaled potential closures of its facilities in Germany, Tavares stressed that European manufacturers cannot afford to accept diminished performance as Chinese competitors gain traction.
His company has adjusted its profit margin targets for 2024, acknowledging the need to adapt to the challenging market conditions.
Tavares also remains opposed to delays in strengthening European greenhouse gas emissions standards. He voiced concerns that his company is unfairly caught in the middle of political disputes within the European Union, particularly regarding support for electric vehicles.
In light of these challenges, Tavares has committed to reducing stock levels and exploring innovative solutions to preserve jobs. He believes that financial health should not solely rely on layoffs and is determined to keep the workforce intact while navigating these tumultuous times.
