Chinese car makers' secret weapon to conquer Europe without factories

Over the recent months, Chinese manufacturers have markedly increased their efforts to penetrate the European market. Cars originating from China have not only become more accessible in our region—they have also begun to appeal to a broader audience.

Following the initial surge of interest in models from China, the expansion's pace seemed to decelerate. However, this slowdown doesn't signify that European companies can rest easy regarding their future and the emergence of new rivals. These competitors are still strategizing on the best approach to officially start their European conquest.

Pasi Rannus, the CEO of Finnish company Valmet Automotive, which manufactures cars for other brands, shared insights on the strategy Chinese manufacturers might employ. Valmet Automotive has a history of collaborating with brands like Saab, Porsche, Opel, and Mercedes, with their partnership with Mercedes ongoing since 2013.

Rannus revealed that contract manufacturing—the very model of production Valmet engages in—presents an ideal opportunity for Chinese manufacturers to penetrate Europe cost-effectively. Rather than constructing large, costly factories, hiring a company to formally manufacture cars in Europe could be a viable solution, especially considering the focus of current regulations.

Could this strategy materialize? The case of Stellantis suggests it might. Through the facilities in the historic Mirafiori complex, the Chinese brand Leapmotor could make its European debut.

The situation with Stellantis, a significant shareholder in this producer increasingly referred to as the 15th brand of the conglomerate, is somewhat more complex. Nevertheless, the principle remains contract manufacturing. If this deal comes to fruition, Leapmotor could very well clear the path for other Chinese brands into Europe.