Europe’s car industry faces crisis – but one material might rescue Mercedes and BMW

The European automotive sector is entering a period of turbulence. Iconic names such as Mercedes-Benz and BMW, long associated with luxury, prestige, and German engineering excellence, are beginning to lose their footing. Markets are contracting, and brand loyalty is being redefined.

In this article, we will take a deeper dive into the industry’s challenges, examining the risks, evolving consumer expectations, and market strategies shaping its future.

 

Table of Contents
1. Introduction
2. The European automotive industry in crisis
3. China’s push: affordable luxury goes electric
4. Eco-luxury as a new direction
5. Natural cork – the future material in automotive
6. Summary
7. FAQ

 

The European automotive industry in crisis

Premium car sales decline in 2024 and 2025

Not long ago, European premium manufacturers such as Mercedes-Benz, BMW, and Audi were regarded as untouchable standards of innovation, craftsmanship, and prestige. Yet sales data from 2024 and 2025 reveal a very different picture. Once considered immune to downturns, the premium segment is now experiencing steep drops in demand—both in Western Europe and in emerging economies.

In Germany, the heart of Europe’s car industry, new premium vehicle sales have plunged by double digits compared with 2023. This decline is driven by the end of incentive schemes and weakening consumer confidence in economic stability. Similar trends are unfolding in France, Spain, and Italy, where buyers increasingly favor lower-cost alternatives, often from Asian brands.

Changing consumer choices – EVs replacing diesel and petrol

The shift in propulsion systems is more than a trend—it’s a revolution whose pace has even caught manufacturers off guard. Just five years ago, diesel engines dominated the premium market as a compromise between performance and efficiency. Today, combustion engines are increasingly perceived as relics of a bygone era.

A growing share of buyers—particularly millennials and Gen Z—view electric mobility not as a trade-off but as a lifestyle statement. Clean energy, zero emissions, silent driving, and futuristic styling resonate strongly with the values of a new, environmentally aware generation of consumers.

Inflationary pressure reshaping the perception of luxury

With rising living costs, higher loan repayments, and stubbornly high inflation across Europe, consumers are reassessing their spending priorities. A premium car is no longer automatically seen as a symbol of aspiration—increasingly, it is viewed as a financial strain. Even wealthy clients are questioning whether investing hundreds of thousands of euros in a new V6 or V8 SUV is still justifiable.

 

China’s push: affordable luxury goes electric

How brands like BYD, Nio, and MG are winning over European buyers

Barely a decade ago, Chinese cars were synonymous with poor quality and outdated engineering in Europe. Today, brands like BYD, Nio, XPeng, and the reborn under Chinese ownership MG are shaking up the European market with sleek, fully electric vehicles that blend appealing design, high practicality, and advanced digital systems.

Chinese manufacturers have shifted strategy—rather than imitating European models, they began leapfrogging them. By skipping investment in combustion technology, they directed resources straight into electrification, artificial intelligence, and digital ecosystems. The payoff is clear: BYD (Build Your Dreams) now ranks among the world’s top EV makers, with models like the Seal and Atto 3 already available in showrooms across Germany, Norway, France, and Spain.

Nio, too, is expanding rapidly, offering not just premium cars but also an innovative battery-swapping model as an alternative to conventional charging. This system, which reduces “refueling” to just a few minutes, is winning over European drivers frustrated by long charging times. Meanwhile, MG, backed by Chinese group SAIC, is capturing market share with its excellent price-to-value ratio, with models like the MG4 and Marvel R setting sales records across Europe.

Why Chinese electric cars are cheaper and more accessible

China’s edge lies not only in technology but also in cost efficiency and long-term strategy. Chinese automakers control every stage of the supply chain: from lithium extraction and battery cell production to final vehicle assembly. This vertical integration enables them to keep prices competitive, while European producers continue to grapple with shortages and escalating component costs.

Moreover, the Chinese government provides strong backing to local manufacturers, both financially (through subsidies and tax incentives) and infrastructurally (charging networks, R&D funding). As a result, Chinese brands can deliver vehicles to European buyers that are not only less expensive but also better equipped than many domestic options.

Equally important, Chinese cars are conceived as digital products from the outset – integrating advanced infotainment systems, autonomous driving features, and seamless smartphone connectivity. For younger generations raised in the digital era, this can outweigh the value of a traditional badge on the bonnet.

The response of European giants – fears of losing the premium market

Traditional players like Mercedes, BMW, and Audi are now feeling the heat. For them, the threat goes beyond falling sales numbers; it touches the very essence of brand identity. When a BYD sedan offers comparable performance and superior digital integration at half the cost of a Mercedes EQE, the question “why pay more?” is increasingly difficult to dismiss.

 

Eco-luxury as the new path forward

Consumer trends: redefining luxury as natural and sustainable

Modern consumers are fundamentally reshaping their perception of luxury. Where once prestige was measured by precious metals, exotic hides, or chrome-plated details, today’s focus is shifting toward authenticity, sustainability, and harmony with nature.

This evolution is most evident among younger buyers, who increasingly associate luxury with quality, practicality, and environmental responsibility rather than excess. In a world oversaturated with plastic, noise, and waste, minimalism, natural resources, and ethical production have become hallmarks of refined taste.

Luxury now extends beyond aesthetics; it includes the product’s story: its origin, who made it, and its ecological impact. Supply chain transparency, ethical sourcing, and carbon neutrality are becoming inseparable from the premium experience. For automakers, keeping pace with this shift is no longer optional.

 

Natural cork – the material of the future in automotive

Properties of natural cork

Natural cork remains one of industry’s most underrated materials, despite its physical attributes making it an excellent fit for automotive use. It is exceptionally lightweight – with a density of just 0.16 g/cm³ – an asset in an era when every gram impacts EV range. At the same time, natural cork offers remarkable resistance to vibration, impact, and compression, while maintaining durability over time.

Its natural cellular makeup also makes it an excellent thermal and acoustic insulator, helping reduce cabin noise and stabilize temperature – even without additional insulation layers. Natural cork is also resistant to moisture, mold, and temperature extremes, making it highly suitable for automotive interiors, even under challenging climatic conditions.

Why it’s sustainable: cultivation, recycling, and carbon balance

From a sustainability standpoint, natural cork is nearly unmatched. It is harvested from the bark of cork oak trees (Quercus suber), grown mainly in Portugal, Spain, and North Africa. Harvesting does not involve cutting down the trees; instead, cork oaks are stripped every 9–12 years, extending their lifespan to as much as 200 years. One tree can provide material for generations, while fostering biodiversity.

Cork forests also deliver critical ecological benefits: they absorb significant amounts of CO₂, prevent soil erosion, and serve as habitats for endangered species. Natural cork is fully biodegradable and recyclable, with a carbon footprint that is dramatically lower than that of plastics or synthetic leather.

How it could reshape interiors at Mercedes and BMW

For marques like Mercedes and BMW, natural cork could meet the growing demand from younger customers seeking alternatives to leather and metal finishes. Cork-trimmed interiors may emerge as a new form of luxury expression, blending craftsmanship, elegance, and environmental awareness.

Natural cork also lends itself to personalization – it can be dyed, embossed, or perforated to create unique textures and patterns. It feels warm and organic to the touch and, importantly, is entirely European, aligning with local production goals and shorter supply chains.

 

Summary

Europe’s premium car sector is at a defining moment. Falling sales, evolving consumer demands, intensifying competition from China, and the reimagining of luxury are compelling brands like Mercedes and BMW to undergo profound change – both technologically and in terms of brand identity.

Traditional symbols of luxury – powerful combustion engines, leather interiors, and stark design – are losing appeal. A new set of values is taking their place: responsible consumption, eco-friendly materials, traceable origins, and closeness to nature. For premium manufacturers aiming to retain loyalty and prestige in the years ahead, redefining luxury for the 21st century is no longer optional.

 

FAQ – Frequently Asked Questions

1. Is natural cork really suitable for premium cars?
Yes. Natural cork offers exceptional technical benefits: it is lightweight, flexible, and resistant to moisture, temperature shifts, and wear. It also provides excellent sound insulation, making it ideal for high-end interiors where comfort and refinement are essential.

2. Is natural cork durable?
Definitely. Despite its soft texture, natural cork is highly resistant to deformation and mechanical stress. Its use in aerospace and space industries highlights its proven durability under extreme conditions.

3. Why are Chinese electric cars more affordable?
Because Chinese companies oversee the entire supply chain – from raw material sourcing to component production. Combined with state support, lower labor costs, and economies of scale, this enables them to deliver competitive pricing without compromising on equipment levels.

4. Does incorporating natural cork lower a car’s carbon footprint?
Yes. Natural cork is renewable, biodegradable, and climate-positive. Cork oak forests absorb CO₂, and harvesting requires no tree cutting. On top of that, natural cork is easy to recycle, significantly reducing its environmental footprint across the product lifecycle.