European automotive industry faces debt and competition pressures

The European automotive sector is facing significant structural challenges. In Germany, major suppliers such as ZF, Continental, and Schaeffler are struggling with high debt levels. A financial analysis by Strategy& indicates that average financial expenses for leading German suppliers reached 102% of their operating profits in 2025, marking the fourth consecutive year of increase. This debt burden complicates the necessary investments for electrification, software development, and industry transformation while making them vulnerable to competition from China.

Simultaneously, the Spanish automotive industry faces intense competition from Morocco. Moroccan production offers lower costs and avoids the regulatory and bureaucratic burdens imposed by the European Union. This competitive advantage is evident in the Spanish market, where the Dacia Sandero—produced in Moroccan plants in Casablanca and Tangier—has become a top-selling model, frequently outselling domestic and other European competitors like the Seat Ibiza.