At the IAA Mobility show in Munich, we can see an avalanche of Chinese carmakers expanding their European offer and/or preparing themselves to expand into the European market. On the other hand, we saw the leading German brands pull out all the stops in their efforts to counter the ‘Chinese invasion’.

There are a lot of Chinese brands in Europe, so surely they can’t all be doing well? Some are hit or miss, some are priced too high, and some may not be quite right for European tastes, but the inroads that Chinese brands are making are having real effects.

In response to the arrival of the Changan subsidiary brand Deepal in the European market, a certain Lasse examined the methods of Chinese carmakers. His analysis goes as follows.

“Deepal’s ambitious entry into the European market appears to be on a perilous path. Despite its official messaging about building trust and offering ‘commitments beyond the showroom’ to European drivers, the brand’s actions in other markets present a starkly different, and deeply concerning, narrative.”

“Deepal’s European strategy is fundamentally at odds with its past behavior. In its home market, the company is accused of breaching its “one-year price guarantee” by introducing a facelifted model with more features for the same price, an act perceived by early customers as a betrayal,” he adds.

“This opportunistic pricing strategy is not an isolated incident. In Australia, the Deepal S07 received a significant “clearance” price drop just months after its launch. This pattern of devaluing early adopters and prioritizing short-term gains over long-term trust poses a significant risk in Europe. The European market is a fortress of consumer protection and high expectations. Research indicates that 45% of European consumers consider brand reputation to be the most important factor when buying a new car, and nearly three in ten do not trust new brands to be reliable,” he continues.

“Additionally, the European Union has a comprehensive framework of consumer laws aimed at preventing “unfair commercial practices”, which could lead to severe legal and financial repercussions for a brand seen as reneging on its promises. If Deepal fails to address its fundamental credibility issues and move away from a short-sighted pricing strategy, its European expansion is likely to end in a pessimistic outcome.”

And he concludes: “It will be challenging to earn the trust of European consumers and establish a stable dealer network, making it improbable for the brand to achieve sustainable success against established competitors in this highly scrutinized market.”

The American fear

Meanwhile, the Americans are also interested in the problem, concerned as they are about the attractiveness of their automotive products. The American market research firm Escalent is in the process of finalizing its Chinese Automotive Impact Brands study for 2025, and there are already some fascinating takeaways.

KC Boyce, the firm’s Vice President of Powertrain Innovation & Energy Transformation, shared some of the preliminary data from the study with the specialized American website InsideEVs, and there’s a lot to dissect.

Escalent surveyed buyers in the UK, Germany, France, Spain, and Italy between May 21 and July 31 of this year, and it learned that the perception of Chinese brands is surpassing that of American brands.

Specifically, the firm found that buyers are more willing to consider a Chinese car over an American one. The study showed that 47% of the surveyed potential buyers would consider a Chinese car, compared to 44% who would consider an American car.

This is a significant gain for Chinese brands; in 2024, the same study said that only 31% of buyers would consider Chinese cars. It’s also a sizable loss for American brands, since in 2024, 51% of buyers said they would consider buying American.

Consumer trust in Chinese brands in general remains low. In the study, only 19% of study participants trusted goods from China, but this is up from 12% in 2024. It’s also a stone’s throw from 24% for the US, which is down from 31% in 2024.

Anti-US sentiment?

The question is why? It’s easy to theorize that anti-US sentiment in Europe has grown significantly this year because of the back-and-forth tariff and geopolitical tensions that have occurred since the Trump administration assumed office.

These tensions extend beyond tariffs to include defense and diplomacy between the US and Europe. It doesn’t take a full-time data archivist to go online and see Europeans are souring on the US.

InsideEVs asked Boyce if this is why the scores for American cars are so low. “Although the study wasn’t intended to assess why consideration was changing over time outside of Chinese brands, I have to believe that geopolitics (tariffs, trade deals, the US stance on Russia/Ukraine) is playing into European buyers’ sentiment about the US and US auto brands,” Boyce answered.

Inroads made by people like Tesla’s CEO and (former?) Trump’s companion, Elon Musk, on internal EU politics hasn’t helped here either. The impressive regression of sales figures for the Tesla brand in Europe is evident proof of that.

Boyd also noted that trust in goods from most countries remained relatively stable in the survey, except for the US, which is the only country that lost points. Likewise, when it came to the willingness of Europeans to buy cars from the six countries surveyed, the US is the only country that experienced a significant decline.

And what about the Chinese?

That doesn’t mean that Chinese brands are in the clear yet, though. According to the Escalent survey, Europeans continue to believe that Chinese cars should be more affordable than those from established brands.

72% of the surveyed people think that a Chinese car should be cheaper than what they paid for their existing vehicle. The study also found that only 13% of buyers would be willing to pay more for a Chinese car, even if it’s objectively superior. The majority of respondents expect a discount.

This could make things challenging for Chinese brands as they make more inroads in Europe. Of course, there’s a big market for small and medium-sized hatchbacks and crossovers in Europe; MG’s and BYD’s success has proved that there is a market for them.

However, many of these brands are aiming to go upscale and enter premium markets. This study shows that Europeans may not be willing to pay premium prices for them. It may be a big ask for Europeans to spend lots of money on a new brand, even without considering the baggage and negative perception some have of Chinese brands.

But there appears to be baggage for American manufacturers, too. American brands selling in Europe offer few affordable or compact EVs for European consumers to choose from. The ensuing lack of visibility in Europe’s most important markets is certainly not helping the perception of American brands.

Invasion? Not yet…

So, the answer to our initial question is still negative. In the 1980s, everybody was alarmed by the ‘Japanese invasion’. Some decades later, the Koreans were the ones to fear. Now, it’s the Chinese. Every time, the venue of these outside competitors coincided with a European car industry that was leaning back and resting on its laurels. The new competitors handily took advantage of this.

Right now, the European car industry is in the same situation. The arrogance of having been ‘the best’ for a very long time is finally waning. The Europeans have finally recognized the need to respond quickly and comprehensively to the new situation.

Let’s hope that this IAA Mobility was the start of a new era. Of course, the challenges are immense, certainly with an unpredictable force in one of the biggest markets like the US,  but, as they say, never waste a good crisis. If you don’t die from it, it can only make you (much) better. The Chinese are certainly here to stay, like their predecessors from Japan and Korea. But overtaking the market? Only when the Europeans let them…