The European automotive industry is currently facing a crisis. Companies such as Mercedes-Benz and BMW, long considered symbols of luxury, prestige, and German engineering, are losing ground. Markets are shrinking, and customer loyalty is being redefined.
In this article, we take a closer look at the challenges facing the industry, analyzing risks, shifting customer expectations, and market strategies.
Table of Contents
1. Introduction
2. The European automotive industry in crisis
3. China’s offensive: affordable luxury goes electric
4. Eco-luxury as a new path forward
5. Natural cork – the material of the future in automotive
6. Summary
7. FAQ
The European automotive industry in crisis
Falling premium car sales in 2024 and 2025
European premium brands – such as Mercedes-Benz, BMW, and Audi – were until recently seen as unrivaled benchmarks of modernity, quality, and prestige. However, sales figures from 2024 and 2025 reveal a very different reality. The premium segment, once resilient to crises, is now suffering painful drops in demand – both in Western Europe and in emerging markets.
In Germany, the heart of continental car manufacturing, sales of new premium cars fell by double digits compared to 2023. This decline is linked both to the expiration of subsidy programs and to falling consumer confidence in economic stability. The situation is also worsening in France, Spain, and Italy, where customers are increasingly opting for cheaper alternatives – often from Asian manufacturers.
Shifting consumer preferences – EVs over diesel and petrol
The transformation of drivetrains is not just a trend but a revolution, the pace of which has surprised even the manufacturers themselves. Only five years ago, diesel engines dominated the premium market, considered the perfect balance of performance and efficiency. Today, for many consumers, the combustion engine feels like a relic of the past.
An increasing number of customers – especially millennials and Gen Z – see electric power not as a compromise but as a lifestyle choice. Clean energy, zero emissions, quiet driving, and futuristic design align with the values of a new, conscious consumer.
Rising inflationary pressure and changing views on luxury
The cost-of-living crisis, rising loan repayments, and persistently high inflation in Europe are making consumers scrutinize their spending more closely. A premium car is no longer seen as an aspirational goal – it is increasingly viewed as a burden. Even affluent buyers are questioning whether spending hundreds of thousands of euros on a new V6 or V8 SUV still makes sense.
China’s offensive: affordable luxury goes electric
How brands like BYD, Nio, and MG are winning over European customers
Just a decade ago, Chinese cars in Europe were synonymous with poor quality and outdated technology. Today, brands such as BYD, Nio, XPeng, and the revived under Chinese ownership MG are storming the European market with modern, fully electric vehicles that combine attractive design with high functionality and advanced electronics.
Chinese manufacturers have learned their lesson – instead of copying European standards, they began leapfrogging them. Rather than investing in combustion engine development, they focused directly on electromobility, artificial intelligence, and digital services. The results are striking: BYD (Build Your Dreams) is now one of the world’s largest producers of electric vehicles, and its models – such as the Seal and Atto 3 – are already being sold in Germany, Norway, France, and Spain.
Nio is expanding just as rapidly, offering not only premium cars but also an innovative battery-swapping model instead of conventional charging. This solution, which reduces “refueling” time to just a few minutes, is impressing European drivers tired of long charging sessions. Meanwhile, MG, backed by China’s SAIC, is winning customers with a strong price-to-quality ratio – models such as the MG4 and Marvel R are breaking sales records across multiple markets.
Why Chinese electric cars are cheaper and more accessible
China’s key advantage is not only technology – it is cost efficiency and strategic planning. Chinese brands maintain full control over supply chains: from lithium mining and cell production to final vehicle assembly. This allows them to offer competitive prices, while European manufacturers still struggle with shortages and rising component costs.
On top of that, the Chinese government supports domestic producers both financially (subsidies, tax breaks) and infrastructurally (charging networks, research and development support). As a result, brands from China can offer European consumers vehicles that are not only cheaper but also better equipped than many local competitors.
It is also worth noting that Chinese cars are designed from the ground up as digital products – featuring advanced infotainment systems, autonomous driving functions, and integration with mobile apps. For younger generations raised in smartphone culture, this often matters more than the logo on the hood.
The response of European giants – fears of losing the premium market
Faced with this offensive, traditional manufacturers such as Mercedes, BMW, and Audi are beginning to feel the pressure. For many, it’s not just about declining sales, but a potential threat to brand identity. If a BYD electric sedan offers comparable performance and greater digital integration at half the price of a Mercedes EQE, the question “why pay more?” becomes hard to ignore.
Eco-luxury as the new path forward
Consumer trends: luxury increasingly equals natural and eco-friendly
Today’s consumers are redefining their relationship with luxury in fundamental ways. Once, prestige was tied to precious metals, exotic leathers, and chrome interiors. Now, very different values are on the rise: authenticity, sustainability, and a connection with nature.
This shift is especially clear among younger buyers, who no longer see luxury as extravagance, but rather as quality, practicality, and environmental responsibility. In a world overloaded with plastic, noise, and excess, minimalism, natural materials, and ethical production are becoming the markers of refined taste.
Luxury is no longer just about appearance – it’s also about the story behind the product: its origin, its maker, and its impact on the planet. Supply chain transparency, responsible sourcing, and carbon neutrality are becoming core elements of premium value. In this context, automotive brands cannot afford to fall behind.
Natural cork – the material of the future in automotive
Properties of natural cork
Natural cork is one of the most underestimated materials in industry, even though its physical properties make it perfectly suited for automotive applications. It is extremely lightweight – with a density of just 0.16 g/cm³ – making it ideal at a time when every gram counts for electric vehicle range. At the same time, natural cork demonstrates excellent resistance to vibration, impact, and compression, while maintaining its properties over time.
Thanks to its natural cellular structure, it also serves as an outstanding thermal and acoustic insulator, reducing noise and helping maintain a comfortable cabin temperature – even without additional insulating layers. Natural cork is also resistant to moisture, mold, and temperature changes, making it an ideal choice for car interiors, even in demanding climates.
Why it’s eco-friendly: cultivation, recycling, carbon footprint
From an ecological perspective, natural cork is nearly ideal. It is harvested from the bark of the cork oak (Quercus suber), which grows mainly in Portugal, Spain, and North Africa. Harvesting does not require felling trees – instead, cork oaks are stripped cyclically every 9–12 years, extending their lifespan to as much as 200 years. A single tree can provide material for generations while supporting local biodiversity.
Cork plantations also play a vital environmental role: they absorb large amounts of CO₂, prevent soil erosion, and provide habitats for numerous endangered species. Natural cork is fully biodegradable and easy to recycle, with a carbon footprint far lower than plastics or synthetic leather.
How it could transform Mercedes and BMW interiors
For brands such as Mercedes and BMW, natural cork could be the answer to the rising expectations of new generations seeking alternatives to leather and aluminum. Interiors finished with natural cork could become a new expression of luxury, combining craftsmanship, aesthetics, and environmental responsibility.
Natural cork also opens up possibilities for personalization – it can be dyed, embossed, or perforated, creating unique textures and patterns. It is pleasant to the touch, warm, and organic – while also being fully European, which carries weight in the context of local production and shorter supply chains.
Summary
The European premium car industry stands at a crossroads. Falling sales, changing consumer preferences, growing competition from Chinese brands, and the redefinition of luxury are forcing companies like Mercedes and BMW into a profound transformation – not only technologically, but also in terms of identity.
The traditional hallmarks of luxury – powerful combustion engines, leather upholstery, and austere design – are losing relevance. In their place, a new canon of values is emerging: conscious consumption, sustainable materials, transparency of origin, and harmony with nature. For premium brands seeking to maintain loyalty and prestige among future generations, redefining what luxury means in the 21st century is essential.
FAQ – Frequently Asked Questions
1. Is natural cork really suitable for premium cars?
Yes. Natural cork has excellent technical properties: it is lightweight, flexible, and resistant to moisture, temperature changes, and abrasion. It also provides outstanding acoustic insulation, making it an ideal material for car interiors – especially in the premium segment, where comfort and quality are paramount.
2. Is natural cork a durable material?
Absolutely. Despite its soft touch, natural cork is highly resistant to deformation and mechanical damage. It is even used in aerospace and space industries, which proves its durability in extreme conditions.
3. Why are Chinese electric cars cheaper?
Chinese manufacturers control the entire production chain – from raw material extraction to finished components. They also benefit from strong government support, lower labor costs, and large-scale production. This enables them to offer competitive prices while maintaining a high level of equipment.
4. Does using natural cork reduce a car’s carbon footprint?
Yes. Natural cork is a renewable, biodegradable material. Cork oak cultivation absorbs carbon dioxide, and the harvesting process does not require cutting down trees. In addition, natural cork is easy to recycle, which significantly reduces its environmental impact throughout the product lifecycle.
We will publicly show your name and comment on this website. Your email is to ensure that the author of this post can get back to you. We promise to keep your data safe and secure.