Europe: "Let the auto industry go to China, we'll focus on something newer!"

Especially the competition from the Chinese electric vehicle market has hit German automaker Volkswagen hard. Although a potential trade agreement with the United States may bring some hope, the outlook for the European automotive industry is not optimistic. Han Dieperink, Chief Information Officer of asset management company Auréus, said on the Dutch radio program BNR: "I would say: stop doing this, think about new directions."

Volkswagen's profit margin is as low as around 5%, and it is struggling. According to Dieperink, the key is to produce as many cars as possible using existing factories and costs. "When the automotive industry and factories are shut down, costs are also incurred, so you must ensure that you have as much operational leverage as possible. Temporarily closing all factories does not help increase returns, and you also have to purchase components, and it is difficult to keep up with the currency fluctuations in the eurozone."

Dieperink said the real issue is whether you should continue producing cars. Only a few car brands, such as Ferrari and Tesla during their peak periods, can achieve high profits, but otherwise, the situation is tough. He said, "Europe once had a large textile and shoe industry, which were great, but now they are produced elsewhere. Cheap Chinese cars are more cost-effective, so why stick to old industries? I would say: go and produce drones, for example."

Nevertheless, Volkswagen's stock has risen 15% this year. However, Dieperink believes this is more like the end of Volkswagen in Europe. "It doesn't necessarily mean the company will go bankrupt, but a Chinese manufacturer might want the name and start producing cars under the Volkswagen brand in China."

Although he acknowledges that Volkswagen is also a difficult company to manage for Chinese enterprises. "It is actually not controlled by shareholders, but also involves unions and the government. It is like KLM Royal Dutch Airlines, which can be considered a national champion company: almost bankrupt ten times, but the government just lets it survive. So I understand why Germans find it hard to let go of Volkswagen from a brand perspective."

This applies to all major European car brands, which have almost all gone bankrupt at some point - French manufacturers are often nationalized as well. Dieperink expects that this situation may happen again: "So I would say: stop messing around, come up with some new ideas, and leave the automotive industry to the Chinese: they want to reduce costs, why not?"