European suppliers have a fresh reason to study Mercedes' China numbers. After the brand's sales plunged 31% in China, CEO Ola Källenius said Mercedes will source “almost everything” in China for Chinese production, starting with the electric E-Class in the second half of 2027. For parts makers in Central and Eastern Europe, the implication is blunt: content for Chinese-market vehicles will increasingly be bought locally, not from European plants.
The sourcing pledge takes the strategic reset we reported recently a step further. BMW, Mercedes, VW and Volvo are betting on local development and Chinese technology as domestic rivals gain share, Automotive News reports — yet analysts question whether these strategies will restore European pricing power. That doubt ultimately lands on suppliers' margins, too.
The mirror image is just as uncomfortable for CEE parts makers. According to the Council on Foreign Relations, Chinese exports to Europe are constrained by a hodgepodge of different trade defense tools — but there is no standard policy ensuring that Chinese assembly operations in Europe use European parts. As Chinese carmakers localize production in the region — Great Wall Motor's first European plant is planned for Bahovitsa near Lovech, where local partner Bulgarian Automotive Industry has taken over the site — local suppliers have no guaranteed slice of the bill of materials.
