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The relationship between China, the European automobile industry and the evolution in its own manufacture of products is well observed in the future of historical brands such as Porsche and newcomers to the engine market, such as Xiaomi. The health of both companies cannot be more opposite to the same problem to solve: the electric car.
Again, China seems to take the advantage.
Porsche’s crisis. In just a few months, Porsche has gone from being the best asset of the Volkswagen Group to be in a specially delicate situation. His cars presented very high benefits, their Porsche Taycan (their first electric car) It had been a success In the early years and forecasts aimed to sell more and more cars at a more and more expensive price.
Today, Porsche plans the dismissal of 1,900 employees. Their profit margins, which aspired to touch 20%, They will move between 10 and 12%. It is still a good figure but is behind the 14% that investors predicted. Its production will be closer to the 250,000 cars for next year than of the 310,000 produced in 2024.
A perfect storm. Porsche’s financial weaknesses arrive at the worst moment. Donald Trump threatens to lift tariffs on European cars (which now pay 2.5%) and that is a serious problem for the company that has one of its main markets in the United States where, in addition, everything indicates that I could continue to cast its most profitable model for its combustion engines and its personalization possibilities: the Porsche 911.
It would be another river in a river that lowers scrambled as a result of a very hard fall in sales in the Chinese market. The market has been threatening a storm for two years. In 2022 they sold 2% less cars there than the previous year. In 2023, the fall was already 15%. And in 2024 he went to 28%. A very hard setback in The first market in the world For the company.
A paradigm shift. What has happened with Porsche is the faithful reflection of what has happened with the entire European automobile industry. Their cars are exquisite, they are well constructed, they have a story and a story. They are excellence and remain a demonstration of status. They are, in short, excellent machines.
But none of this are worth them in China. The public, Thanks to huge subsidies To the purchase, he has made the leap to the electric car and now they expect something else. They aspire to a software defined product, with four wheels and a brain that drives thousands of intelligent and digital functions that provide an extra to daily paths.
In just a couple of years, the German automobile industry, once a reference in Chinese luxury, has become an obsolete product. “It was only an electrified Porsche. That’s it,” said a Chinese client to Bloomberg to express its disappointment when you get on the Porsche Taycan and compare it with what your rivals are doing there.
“I didn’t even think of a German”. The words are from Seaky He, known influencer in China, collected by The New York Times. “When choosing my new car, I didn’t even think about buying another German car,” he explained when pointing out why I had opted for a Xiaomi Su7 When his first car had been a Mercedes Clade in 2017. Then, German remained an example of a luxury vehicle.
The remote parking or the control of the car temperature from the mobile phone were some of the digital incentives that helped Seaky to decide for the Xiaomi car. “It’s hard to see them like luxury cars now,” Ryan Xu said Bloomberg to justify why he had turned his back on Germany after having a Mercedes Cla and a Mercedes G Class.
“They are indistinguishable in quality” All this we talked about now should know in Porsche. In fact, their own consultants claimed that Chinese cars have been “Indistinguishable in quality” of Europeans, an incentive when winning market in Europe and confirmation for the Chinese client that It is not being wrong.
But, in addition, in the case of Xiaomi Su7, data on paper say that in a year they have lived up to Porsche and Tesla. Their engines are so powerful (or more) that those of these companies but have the advantage of offering systems Autonomous driving (supervised) more advanced and have offered surprising demonstrations of how their remote parking system behaves.
One year of heart attack. Although Xiaomi has managed to read that the automobile market in China points in a very different direction than we knew in Europe, the truth is that its figures in just one year They have been especially good.
When It was launched in April Of 2024, Xiaomi set the goal of reaching the 100,000 units produced from the Xiaomi SU7 for that year. In the last days of December exceeded 130,000 units That he had put the objective of recalculating his expectations, given the good reception among the public.
The reason for success is evident: not only offers better benefits than a Porsche Taycan, also adds a layer of digitalization and automated functions that the German model is completely lacking. And all for a fraction of the price of German. While The Porsche Taycan cheaper It is sold for 918,000 yuan (more than 120,000 euros to direct change), the Xiaomi Su7 is in the market for 215,900 yuan in China (less than 28,000 euros to direct change).
Photo | Xiaomi
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