Auto suppliers and electric vehicle makers from China flooded a major trade fair in Germany, by Reuters

By Victoria Waldersee

FRANKFURT (Reuters) – Nearly 900 Chinese auto suppliers and several electric vehicle makers are showcasing their products at a Frankfurt trade fair as the country’s auto sector defies looming trade barriers to expand its global footprint and to counter the erosion of profitability at home.

Chinese carmakers including BYD ( SZ: ), Geely, Hongqi and GAC International were to exhibit their vehicles at the trade show, called Automechanika, as an additional feature of the normally supplier-focused event.

The country’s auto sector is investing heavily in overseas expansion, even as Europe and North America erect trade barriers to stem the flow of electric vehicles made in China, which they say benefit from unfair subsidies.

The so-called “EV Expo”, which opens on Tuesday, has been established in partnership with the China Council for the Promotion of International Trade, an additional feature to the normally supplier-focused event.

“We want electric vehicles made by Chinese automakers, which are currently somewhat unknown, to gain confidence in the industry,” Olaf Musshoff, director of Automechanika, told a press conference.

China’s auto sector’s share of total investment in China rose from 16 percent in 2018 to 22 percent in 2023, according to a Moody’s (NYSE: ) analysis, and car exports hit record levels this year.

The large showing of Chinese suppliers – almost double the number of German suppliers present – highlights their growing role in the global supply chain, with Chinese carmakers increasingly planning local production in Europe and elsewhere to circumvent trade tariffs that limit imports .

A PwC study released this month warned that the declining availability of capital is making it difficult for suppliers in Germany to invest in innovative technologies, blocked by a focus on cost efficiency.

Chinese companies – often with state support – were more likely to spend on improving batteries and software, the study found, gaining market share from German and Japanese firms.

However, the size and scope of Automechanika Frankfurt – with 4,200 companies present from more than 170 countries – demonstrated that Europe is still essential for driving innovation in the sector, said Frank Schlehuber of the European supplier association CLEPA.

“Frankfurt is still the center of gravity,” he said.