🚗 When I look at BMW, Mercedes or Volkswagen, it's quite clear how much pressure European carmakers are under today.

It's most visible right now with Volkswagen $VOW3.DE. CEO Oliver Blume told employees that the cost-cutting journey is far from over. According to him, in some German plants labor costs are more than double compared to comparable European locations, and several factories still have no clear future after 2030. Volkswagen is going through one of the biggest restructurings in its history.

And it's certainly not alone. BMW $BMW.DE saw pre-tax profit fall 35% in the second quarter, and sales in China dropped roughly 30%. The company has already announced further workforce reductions and says it must reassess things that were practically untouchable before.

Mercedes-Benz $MBG.DE is in a fairly similar situation. In the second quarter, significant cost savings helped and operating profit rose, but sales in China also plunged 30%, prompting the carmaker to lower its expectations for this year's revenue and sales.

For me, the most interesting part is China. The market that for years was a huge source of profits for German carmakers is changing rapidly before their eyes. BMW, Mercedes and Volkswagen all saw sales drop over 30% there in the second quarter, and domestic brands are getting stronger. And the same Chinese competition is gradually pushing into Europe.

European carmakers now have to simultaneously cut costs, invest huge sums into electromobility and software, and fight Chinese competitors that are often faster and cheaper.

Among European players, I think only $RACE.MI is holding its ground, as it won't easily lose its exclusive customers.

Does anyone have European carmakers in their portfolio? And do you believe BMW, Mercedes or Volkswagen can adapt to the current pressure, or is the entire European auto sector currently off your radar?