Vehicle makers are adapting their manufacturing strategies to rapidly changing US trade policies.
Since the US government announced it was hiking import tariffs on new vehicles and components to 25% earlier this year, global automakers – including US manufacturers GM and Ford – have scrambled to adapt their existing business plans and implement new strategies to safeguard their positions in the world’s second-largest auto market. Many automakers, already struggling with falling market shares and volumes in China, the world’s largest vehicle market, have since substantially revised down their earnings forecasts for the current year and subsequent years.
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Our feature on this topic also summarises the major OEMs’ US investment plans: Global automakers step up US investments
The latest US sales data suggests the pull-forward effect ahead of tariff implementation is now over. Moreover, analysts at GlobalData expect the US vehicle market to slow further in H2.
US vehicle market lukewarm in June – GlobalData
According to GlobalData, the latest data on Western Europe’s PV (passenger vehicles – cars) market showed that sales in the month of June had fallen 6% YoY to 1.1 million vehicles. The selling rate improved though, standing at 11.6 million units/year, from the 10.9 million units/year recorded the previous month. Overall, though, it has been a tough first half to 2025, with YTD sales down over 1%, on what is a weak base. That makes it a pretty challenging market environment for all – OEMs and suppliers.
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By GlobalDataWestern Europe’s car market down 1% in first half of year – GlobalData
On that note – and looking at the bigger picture – some interesting data on profit margins out this week caught my eye. According to Bain & Co, automotive OEM margins continued to decline in Q1, falling to 5.4% – a more than 40% drop from their 2021 peak. Check out the insightful chart in this article: Automotive OEM margins declining further – Bain
Bain also warns that OEM margins may get squeezed further in 2025 and beyond by persistent inflation and high interest rates causing subdued demand, rising costs, and falling prices. All while negotiating the dual burden of producing both combustion engine vehicles and EVs for an extended period. And yes, OEMs will naturally opt at some point to squeeze their suppliers, who will squeeze theirs, in turn.
And China? The world’s largest car market may still be strongly up volume-wise, but there’s market support from subsidies and a brutal price war going on: China’s passenger vehicle retail sales rise 18% in June
Some interesting thoughts on autinomous vehicles from our guest contributor this week: Antoni Grau, ADAS Business Unit Director at Spain-based Tier 1 supplier, Ficosa. Well worth a read.
Is Europe ready for autonomous vehicles?
Eyebrow raiser of the week.
Not only does China have a long list of OEMs, but there are proliferating brands under the parent companies, too. Chery springs to mind with Omoda and Jaecoo. But which little known Changan-owned brand (top of the page image) is bound for a major North African market? Avatr.
Quote of the week
“It’s early days. It’s not going to be a mass-market brand. Rather, it’s a brand that has aspirations at some point in the future to be a premium brand, but it’s really all about the technology story.
“We’re very keen to try, as best we can, to explain the difference between a car company, a tech company, and a tech company that builds cars – that’s what Xpeng is. It’s quite a difficult one to explain to big audiences, but we’ll certainly have a go.” – William Brown, Xpeng’s MD for UK and Ireland.
INTERVIEW: Xpeng and its market entry strategy for the UK
Dave Leggett, editor
