Eight "redundant" car plants were counted in Europe
Photo: EPA

Weak demand for cars and the expansion of Chinese brands into the European market may lead to the closure of eight plants in Europe. About this writes Bloomberg.

"In the coming years, European automakers will lose one to two million cars to Chinese brands. This year, the share of Chinese automakers in Europe will reach about 5%," said Fabian Piontek, Head of AlixPartners in Germany.

Car plants are usually profitable if they are designed to produce at least 250,000 cars a year, experts say. If Chinese manufacturers sell about 2 million cars a year in Europe by 2030, the region will have eight more factories than it needs.

Automotive plants in the EU are operating at an average of only 55% of capacity, and sites are less than three-quarters full, according to data from the consulting company AlixPartners.

Stellantis NV is in the worst position: Alfa Romeo's European plants are about 45% full.

According to the European Association of Automobile Manufacturers, deliveries to Europe grew by only 0.9% last year, reaching about 13 million vehicles.

Chinese brands such as BYD and MG (SAIC Motor Corp.) could take 10% of the market by 2030, increasing pressure and forcing capacity cuts.

AlixPartners estimates that closing a large plant with about 10,000 employees will cost about €1.5 billion, and the entire process will take one to three years.

Last year, it took Volkswagen management months to reach an agreement with labor union leaders on cost-cutting. In the end, the company abandoned plans for the first ever VW plant closures in Germany .

The final agreement included a reduction in production capacity and 35,000 staff cuts.