German Media: China and Europe Compete for the South American Auto Market, Will Europe Hinder Itself?

The Chinese offensive in the electric vehicle market in South America is in full swing, but the European Parliament has temporarily suspended the free trade agreement between the EU and the Southern Common Market. This agreement had originally brought huge opportunities for the German automotive industry. Now, a battle for future markets has already begun.

23-year-old Philipe Andrade and 26-year-old Carlos Alberto Andrade are not only young, smart, and forward-looking, but they are also heirs to the Brazilian car empire CAOA.

Their father, Carlos Alberto de Oliveira Andrade, founded the car company CAOA in 1979, with the company name derived from the initials of the founder's name.

The new generation of leaders has already started to point out the direction for future development. As recently reported by the business magazine "International Valor," CAOA plans to start producing another Chinese brand of cars this year: Changan Auto.

The factory located in the central Brazilian city of Anápolis produced 30,000 units in 2023, doubling the next year. The production may have reached 70,000 units in the just-passed 2025. This factory operates continuously 24 hours a day.

According to a study by Bright company cited by the Brazilian newspaper "Estadão," by the end of 2030, one-fifth of new cars in Brazil will come from China.

By comparison: In the first half of 2025, German manufacturers produced 289,200 passenger cars in Brazil and Argentina, while the number of cars exported from Europe to the Southern Common Market (Mercosur) was 18,400.

A Historic Moment in Argentina

Not long ago, the Chinese-made car carrier "BYD Changzhou" arrived at an Argentine port. This giant ship, built specifically for transporting Chinese-made cars, can carry up to 7,000 vehicles.

According to media reports, a total of 5,841 cars arrived at the most important port in the province of Buenos Aires, located on the Paraná River. These cars include not only pure electric vehicles, but also a hybrid SUV model.

BYD began selling cars in Argentina last year. Instead of choosing a local partner, the company relied entirely on its subsidiary for sales locally. Therefore, almost the entire value chain is controlled by China.

The government led by the liberal president Milei has been gradually easing restrictions on the hybrid and electric vehicle markets, setting a tax-free quota of 50,000 cars per year, which do not need to pay the 35% import tariff. This government-led plan may continue until 2029, when it will allow 250,000 tax-free imported cars.

Uruguay Sees a Surge in Electric Vehicles

As a member of the Southern Common Market, Uruguay is also experiencing a boom in electric vehicle sales: a 147% growth rate in 2025. This data comes from the annual report of the Uruguayan Automobile Association (ACAU), representing the 26 largest companies in the automobile industry.

The influx of Chinese cars marks the beginning of fierce competition in the Latin American market. European companies had hoped that the free trade agreement between the EU and the Southern Common Market would consolidate their position in South American countries such as Argentina, Brazil, Paraguay, and Uruguay.

However, the European Parliament voted to submit the agreement to the European Court of Justice for review. Until the European Court gives its opinion, the European Parliament will not be able to vote on the agreement itself. Although the agreement remains valid for now, it brings legal uncertainty and indicates that Europe is not a reliable partner in negotiations.

A spokesperson from the German Automotive Industry Association (VDA) told DW, "The agreement between the EU and the Southern Common Market brought great opportunities for the automotive industry. Lowering the currently high tariffs in the Southern Common Market is particularly significant. Currently, the tariff on automotive parts is 14% to 18%, and the tariff on passenger cars is as high as 35%. At the same time, the EU's tariff reductions also created new export opportunities for the Southern Common Market countries, promoting local economic development."

The association finds the decision of the European Parliament difficult to understand. Association chairman Müller told DW, "The European Parliament's resolution on the judicial review of the EU-Southern Common Market agreement sends a shocking signal. This could greatly delay the implementation of the agreement, possibly even delaying it by several years." The EU must provide clear explanations as soon as possible regarding the provisional implementation of the agreement.

Germany Faces Great Losses

According to the German Automotive Industry Association, there are currently 310 branches of German car companies in the Southern Common Market. These companies are mainly suppliers, creating employment opportunities locally.

In the global automotive market competition, the shift in power is happening as quickly as the evolution of the geopolitical landscape. The battle for the two major markets in South America has already begun.

Source: DW

Original: toutiao.com/article/1856052201245769/

Statement: This article represents the views of the author alone.