On May 31, Great Wall Motor (GWM) announced plans to close its European headquarters in Munich, Germany, by August and lay off all 100 employees. The company clarified that this move does not signal a complete withdrawal from Europe but rather a halt on expansion into other European markets. Additionally, GWM will relocate its European parts warehouse from Nuremberg, Germany, to Amsterdam, Netherlands, doubling its size to better serve customers in the region.
Short-Lived European Ambitions
This decision comes as a surprise considering GWM’s ambitious European expansion plans just three years ago. In 2021, the company proudly established its German subsidiary and European headquarters in Munich, declaring Europe as a key focus for its global strategy. In April 2024, Great Wall further committed to overseas expansion, setting a bold target of selling over one million vehicles abroad by 2030. However, just a month later, the company announced the closure of its European headquarters.
Declining Sales Amidst Overall Market Slump
Great Wall Motor’s overall sales in May fell 9.51% year-on-year to 91,000 units, marking the first monthly decline in sales for the company. In the new energy passenger vehicle segment, Great Wall ranked 10th, just ahead of NIO.
Among its sub-brands, only TANK saw positive sales growth, with 20,326 units sold, representing a 94.90% increase year-on-year. However, the highly anticipated ORA and WEY brands experienced significant declines. WEY sales plummeted 50.40% to 2,862 units, while ORA sales dropped 43.43% to 6,005 units.
Reality Check: Chinese Carmakers’ Struggles in Europe
Despite media reports touting the affordability and competitiveness of Chinese new energy vehicles and their rapid conquest of the European market, the reality paints a different picture.
Data from Schmidt Automotive Research Consulting reveals that in the first four months of 2024, Great Wall’s sales in Western Europe amounted to a mere 1,400 units, including WEY plug-in hybrid models. BYD’s new car registrations stood at 9,970, while NIO surpassed 500 units, XPeng reached 1,480 units, and Geely’s Polestar data was unavailable but indicated a 34% year-on-year decline.
Furthermore, in the first four months of 2024, the market share of Chinese-branded passenger cars (excluding Chinese-made vehicles like Tesla) in 18 Western European markets was a mere 2.9%. This definition of Western Europe includes member states that joined the EU before 2004, as well as Norway, Switzerland, Iceland, and the UK.
Zooming in on the German market for 2023, a full year, both BYD and NIO, the two most prominent Chinese automakers venturing overseas, sold only 4,139 and 1,263 units, respectively.
Conclusion: Reassessing Strategies and Focusing on Viable Markets
Great Wall Motor’s decision to close its European headquarters serves as a stark reminder of the challenges faced by Chinese automakers in penetrating the European market. While European consumers are increasingly embracing electric vehicles, brand perception, established loyalties to European brands, and concerns over after-sales service continue to hinder Chinese automakers’ progress.
Moving forward, Chinese automakers need to carefully reassess their European strategies, consider deeper localization efforts, and address consumer concerns to gain a foothold in this competitive market. Meanwhile, focusing on markets like Brazil, where they have shown some success, could prove to be a more viable approach in the short term.
