Regulation, Tariffs, and Chinese Competition Impact European FVL Market

The European Vehicle Logistics Association (ECG) held its General Assembly and Spring Congress in Cascais, where leaders addressed challenges facing the finished vehicle sector. At the event, ECG officials expressed concerns about various factors affecting the market, including geopolitical uncertainty, inflation, trade barriers, tariffs, and competition with Chinese manufacturers. This acknowledgment underscores the association’s willingness to tackle pressing issues head-on.

The European automotive market outlook for the year appears pessimistic, with experts forecasting a 1.7% contraction. Justin Cox, the director of global production at GlobalData, highlighted the need for logistics service providers (LSPs) to reevaluate their operational capacities, resource allocation strategies, and long-term investments. Wolfgang Göbel, the president of the ECG, emphasized the importance of adapting to the current market situation, given the stagnation and lack of recovery in both domestic and export markets.

To assist its members in navigating these challenges, the ECG has developed business intelligence reports, forecasting tools, and best practices. The association aims to ease the pressure on its members, particularly when it comes to purchasing decisions, by providing tools, standardization guidelines, and automation solutions. Despite these internal efforts, external factors continue to exert significant pressure on the European finished vehicle logistics (FVL) market.

One major concern is the expected rise in imports facilitated by Chinese original equipment manufacturers (OEMs) entering the European market. Chinese OEMs are perceived as offering greater competitiveness than their European counterparts, influencing the European market landscape considerably. Recognizing this shift, ECG has initiated collaboration with the Chinese Association of Finished Vehicle Logistics (CALA) to foster stronger ties among member organizations and ensure the seamless integration of Chinese OEMs in Europe.

The agreement between ECG and CALA aims to establish shared standards, avoid disruptions, and ease market access for Chinese OEMs expanding their presence in Europe. ECG President Wolfgang Göbel noted the benefits of Chinese manufacturers aligning with European standards, describing it as advantageous for all stakeholders involved. Despite the influx of Chinese competition, ECG remains cautiously optimistic about opportunities arising from increased Chinese presence and views it as a potential asset to the existing FVL market.

Multiple ECG officials emphasized the necessity of cooperation between Chinese OEMs and European FVL firms to address logistical challenges. Mark Hindley, ECG’s Vice-President, highlighted the need for collaboration as Chinese OEMs lack the existing infrastructure in Europe to match European counterparts. He stressed the importance of leveraging the expertise and facilities of European FVL firms to create efficient supply chains for Chinese automakers looking to penetrate the European market.

Hindley underlined the reliance of Chinese OEMs on shipping companies with operational capabilities in Europe to transport vehicles efficiently. He pointed out the logistical constraints of large vessels used by Chinese OEMs due to port limitations in Europe, emphasizing the need for collaboration with existing European infrastructure. Hindley’s remarks underscore the intricate and collaborative nature of the European FVL ecosystem.