Chinese automaker Great Wall Motors plans to close its European headquarters in Munich in August and lay off about 100 employees, according to reports from Chinese media. It is reported that the decision to cease production by Great Wall Motors is a result of poor sales of its electric vehicles in Europe.
In a statement released on May 31 on its website, Great Wall Motors stated that with the European electric vehicle market becoming more challenging, the company is adjusting its European strategy. A representative of the company mentioned on Monday (June 3) that around 100 European employees will be laid off.
Great Wall Motors and other Chinese manufacturers are facing challenges from the European Union’s increasing import tariffs. The EU is set to announce the preliminary results of its anti-subsidy investigation next week. The tariffs are expected to decrease the competitiveness of Chinese car manufacturers.
Based on trade data from 2023, with a 10% tariff in place, every additional 10% increase in tariffs by the EU would result in approximately an extra $1 billion in costs for Chinese electric vehicle exporters. As Chinese electric car manufacturers expand their exports to Europe, this cost is set to rise this year.
Earlier this month, the Biden administration raised tariffs on Chinese electric vehicles from 25% to 100%. Italian Minister of Economy and Finance Giancarlo Giorgetti mentioned that the EU following in the footsteps of the U.S. regarding tariff issues might only be a matter of time.
The company also plans to halt its expansion in Austria and Switzerland and instead provide services to the European markets like Germany, the UK, and Ireland from China.
In recent news coverage by Nikkei, a senior employee working for the Great Wall electric vehicle brand “Wey” at the Munich headquarters called it a “dirty business at the expense of sacrificing employees.” The employee chose to remain anonymous.
Nikkei also reported that Great Wall’s subsidiary SVOLT had to halt its plan to build a battery factory in Lauchhammer, Brandenburg, in eastern Germany due to cancelation of orders from a major client.
In Europe, Great Wall’s electric and plug-in hybrid vehicles are sold under the brands Ora and Wey. In Germany, the Ora 03 is sold, a compact car priced at around €40,000 ($43,300). “Earlier this year, the promotional price for this car was only €27,000.
Germany’s leading automotive magazine “Auto Motor und Sport” conducted safety tests on the driving assistance system of the Ora 03 earlier this year, resulting in a low rating. Testers found that with the lane departure warning system activated, the car drove directly into a ditch.
According to the German Federal Motor Transport Authority, Great Wall Motors sold only 247 cars in Germany in April, while Hyundai from South Korea sold 9,106 cars, and Toyota from Japan sold 7,504 cars.
Great Wall Motors is not the only automaker disappointed with its sales in Germany. Earlier this year, China’s BYD saw its first ship dock in the northern German port of Bremen with 3,000 electric cars from China, a move that drew anger from local politicians and the automotive industry over the influx of cheap Chinese vehicles.
According to the German Federal Motor Transport Authority, BYD only sold 183 cars in Germany in April, even falling behind Great Wall Motors.
Nikkei reported that Ferdinand Dudenhoeffer, director of the Center Automotive Research in Bochum, Germany, believes that Great Wall Motors stumbled into Europe without a clear image.
Dudenhoeffer told Nikkei, “When they don’t know what to do, they hurt themselves with discounts, and then they come up with a wrong idea by introducing several brands to the market at the same time, all of which are quite ordinary.”