• , EU car sales are flat or declining.  Now, Volkswagen is announcing they lost half their profits in one year and will be cutting 50,000 jobs in the next four years.
  • (MSM – Europe) – Volkswagen just revealed its operating profit sank like a stone last year, dropping by more than half as tariffs, Chinese competition, and shifting strategies took a serious bite out of the bottom line. And that performance now has the VW Group’s execs reaching for the cost-cutting scissors, including plans to shed 50,000 jobs by the end of the decade.
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  • This was very predictable. In essence, EU car companies buy Chinese car company carbon credits, to avoid the EU fines.  The Chinese car companies then use the carbon credit revenue to subsidize lower priced Chinese EVs to the European car market, thereby undercutting the European EV car companies.

 

  • The EU tariff applied to gasoline powered cars or hybrids from China is 10%.  That tariff is not enough to stop the imports. The Chinese hybrid autos are substantially less than European car brands, and there’s no financial incentive for China to build auto plants in the EU zone especially when you consider the EU is subsidizing those cars by purchasing carbon credits.
  • At the same time, the EU has destroyed its energy sector by chasing windmills and solar farms instead of maintaining the much cheaper coal and gas alternatives.  Overall, Europe has made a series of really bad decisions, but those consequences will surface the hardest within the largest industrial economy, Germany.