European carmakers turn to Chinese rivals to fill factory floors

{"text":[[{"start":12.265,"text":"Once the humming engine of the local economy, Fiat’s sprawling Cassino car plant, just 130km south-east of Rome, stands with the desolate air of near abandonment."}],[{"start":22.56,"text":"Parking lots are empty, gates locked and many guard booths deserted as its 2,200 employees are only called into work a few days a month. Just 6,700 cars were produced in the first half of 2026 — a fraction of the annual capacity of 300,000."}],[{"start":40.4,"text":"Denise Tisci, a 40-year-old mother of three, has not worked a shift since May and, like other workers at the plant, depends on a public furlough scheme."}],[{"start":49.953,"text":"“We’ve cut back on a lot of things — even something as basic and simple as taking the kids out for a pizza,” said Tisci, a plant employee since 2007. “It’s humiliating when we have to face the children.”"}],[{"start":null,"text":"

"}],[{"start":62.32,"text":"Fiat workers expect the automaker’s owner Stellantis to seek a China solution for the Cassino plant, echoing its recent deals in Spain and France with Leapmotor and Dongfeng. It is not alone, as more European carmakers turn to Chinese rivals to help resolve problems partly stemming from their rapid inroads into the region."}],[{"start":81.849,"text":"“This is not just a way to survive and catch up with our new competitors but it is also an opportunity to gain volume and growth in Europe,” Emanuele Cappellano, the head of Stellantis’s European operations, told the FT on its recent Chinese partnerships."}],[{"start":96.72,"text":"For the group’s plants in Italy, full closure has been ruled out and Cappellano indicated a solution for Cassino will be found by the year-end. With the company also looking for a partner to revive its struggling Maserati brand, the likely scenario is to tie up with a Chinese group it already works with — either its EV joint-venture partner Leapmotor or state-owned Dongfeng."}],[{"start":118.08,"text":"“Any partner that moves production to these plants is fine,” said Cassino’s mayor, Enzo Salera. “The automotive crisis is affecting the entire economy,” he added, noting that local retailers and restaurants had been hard hit."}],[{"start":null,"text":""}],[{"start":130.64,"text":"European automotive manufacturing accounts for about 7 per cent of the continent’s GDP and supports nearly 14mn jobs. With the region’s car sales still some 3mn below pre-pandemic levels and Chinese entrants gaining ground, others are also adopting the new playbook for survival. Nissan is working with Chery in the UK, Volkswagen is in talks with Xpeng, while Ford clinched a deal with Geely in Spain."}],[{"start":157.486,"text":"“The environment in Europe has changed forever,” Ford’s European boss Jim Baumbick said last month as he unveiled the Geely tie-up. “The goal is to get to the lowest cost.”"}],[{"start":167.68,"text":"In all, with plant utilisation in the European car sector running at under 60 per cent, the capacity to produce some 2.5mn vehicles is potentially up for grabs, according to AlixPartners."}],[{"start":178.48,"text":"Stellantis is doubling down on a strategy some industry executives see as a short-term fix but an eventual road to self-destruction unless local supply chains and technological knowhow are bolstered."}],[{"start":null,"text":""}],[{"start":190.505,"text":"At its Spanish and French factories, Stellantis has already invited Leapmotor and Dongfeng to produce models there."}],[{"start":197.377,"text":"The Dongfeng deal has also been broadly accepted by workers in France since it could help save a 1960s-era factory in Rennes, Brittany. Like many other Stellantis plants in the country, the plant has been reduced to one assembly line, with surrounding land sold off."}],[{"start":212.16,"text":"“Chinese cars are in our ports as we speak,” said Laurent Oechsel, a representative of the French CFE-CGE union at Stellantis. “Do we want to keep fighting this off like the textile industry did at one stage, or do we want to continue to produce cars in France, with the Chinese?”"}],[{"start":null,"text":""}],[{"start":null,"text":""}],[{"start":227.84,"text":"The challenge for European policymakers, carmakers and unions is to ensure that the manufacturing partnerships will protect jobs while bolstering the region’s supply chains with Chinese technology."}],[{"start":239.391,"text":"Currently, many Chinese cars promoted as made in Europe are mostly fitted with components made in China and then shipped to the EU for final assembly."}],[{"start":248,"text":"“If the intention is to create a technological industrial partnership that can fill and preserve the plant and help safeguard the supply chain, it’s welcome,” Italy’s industry ministry Adolfo Urso told the FT. “As long as people come to Italy to produce — not to assemble.”"}],[{"start":263.36,"text":"Partnerships are par for the course among carmakers, but European carmakers are hoping to learn to make car production faster and cheaper through the Chinese partnerships."}],[{"start":null,"text":""}],[{"start":272.8,"text":"In turn, Chinese brands want to boost European production in anticipation of stringent new local content rules, which Brussels plans to impose as early as mid-2027 in a bid to increase investment flow into the continent, create additional jobs and pave the way for the transfer of technology and skills."}],[{"start":290.849,"text":"Under the so-called Industrial Accelerator Act, the EU is proposing a 70 per cent local content threshold for car components if they are to qualify for subsidies or public contracts, with local battery production expected further down the road."}],[{"start":306.48,"text":"Among the big unknowns is the extent to which Chinese groups will transfer technological knowhow and intellectual property, as well as how quickly they will start using European components."}],[{"start":null,"text":""}],[{"start":316.64,"text":"In Spain, where the government has successfully courted Chinese groups including battery maker CATL, Chery, and MG owner SAIC to set up factories, they have yet to see guarantees over technology transfers and the level of local labour and components they will use."}],[{"start":332.72,"text":"There is high anxiety within the auto supply chain, where components companies employ twice as many workers as carmakers themselves. “We workers in the supply chain could be at risk,” said Marco Leone, 62, whose employer makes metal fenders for the Cassino plant."}],[{"start":349.2,"text":"Similar worries surround Nissan’s agreement to share production at its Sunderland plant with Chery from next year. People with knowledge of the discussions said three models will be built for the Chinese group, which also owns the Jaecoo and Omoda brands."}],[{"start":361.898,"text":"“Let’s say in year one, the cars are essentially made of kits from China. That’s great for the assembly line workers, but it’s not necessarily so good for people in the stamping shop, the body shop and the paint shop at Nissan and local external suppliers,” warned Ian Henry, an automotive production expert who runs the AutoAnalysis consultancy."}],[{"start":null,"text":""}],[{"start":null,"text":""}],[{"start":380.138,"text":"Henry added that Chery would need to increase localisation quickly if it were to export to the EU but the timeline was unclear and discussions were ongoing on whether UK-made cars would be included in the Made in Europe framework. The higher cost of using UK suppliers is also an issue, one person close to the talks added."}],[{"start":398.48,"text":"Chinese car executives stress that they are committed to using local supply chains but acknowledge that the shift would not come overnight."}],[{"start":405.04,"text":"“Localisation is a gradual process, one measured not by the calendar, but [by] the maturity of supply chains, cost structures and our readiness to become part of the local industrial ecosystem,” Charlie Zhang, executive vice-president of Chery International, said in a statement to the FT."}],[{"start":421.44,"text":"Sluggish Chinese demand and the pressure to increase exports are leading factors holding back European localisation, according to analysts."}],[{"start":430.146,"text":"China’s global exports are set to rise 41 per cent to more than 10mn cars this year as the government presses manufacturers to utilise excess capacity."}],[{"start":439.297,"text":"“Local Chinese demand is so much worse than expected that the pressure on the Chinese automakers to export is a lot bigger,” said Thomas Besson, head of autos research at Kepler Cheuvreux."}],[{"start":449.92,"text":"“Chinese automakers have not really started building a lot of cars in Europe, even if they talk a lot about it and their intention to do so,” he added."}],[{"start":null,"text":""}],[{"start":458,"text":"The Made in Europe proposals are likely to further increase the costs of building cars in Europe, forcing some Chinese manufacturers with smaller sales to abandon access to European subsidies and continue exports in the near term."}],[{"start":471.141,"text":"“If it becomes financially too expensive, we pay the tariff and we keep on shipping cars [from China],” said one executive at a Chinese carmaker."}],[{"start":479.12,"text":"For some Chinese carmakers like BYD, tie-ups do not make strategic sense."}],[{"start":484.72,"text":"“I think it’s better run by ourselves,” Stella Li, BYD’s top international executive, said, calling a joint venture “impossible”. “It’s very hard to ask permission. We make decisions in like five minutes.”"}],[{"start":493.92,"text":"BYD plans to start mass producing its vehicles in Hungary by the end of this year. But the Made in Europe proposal has forced it to look for a second facility in Spain or France before finishing a plant in Turkey as earlier announced."}],[{"start":509.6,"text":"Not all European carmakers are searching for Chinese tie-ups. Some analysts say companies can respond more quickly to market changes on their own and there was no guarantee that their Chinese partners would succeed in Europe. “I think companies that remain independent have much more control,” said JPMorgan analyst José Asumendi."}],[{"start":526.657,"text":"Back at Cassino, veteran autoworker Roberto D’Epiro, 53, lamented that the plant was “shutting down — it’s slowly dying”."}],[{"start":534.773,"text":"However, he insisted a partnership with another carmaker “must be on equal terms” otherwise it would not have solved anything. “We’ll just be prolonging the agony.”"}],[{"start":549.68,"text":"Additional reporting by Giuliana Ricozzi in Cassino, Sebastien Ash in Frankfurt and Harry Dempsey in Tokyo"}],[{"start":551.527,"text":"Data visualisation by Clara Murray in London"}],[{"start":559.56,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1785979208_8741.mp3"}