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Car industry closures reveal depth of European crisis

Marxist Analysis · 2026-05-13

Core Argument

The article argues that the wave of car industry closures and mass layoffs across Europe in late 2024 is not a cyclical downturn but the expression of a structural crisis of European capitalism. European capital, once the world's industrial vanguard, is now in irreversible decline relative to US and Chinese rivals. The central thesis is that this decline is rooted in decades of underinvestment, technological complacency, and the fetter of the nation-state system — and that no amount of tariffs, subsidies, or "industrial policy" can reverse it. The only way forward is the socialist unification of Europe by the working class.

Theoretical Grounding

The analysis draws on the Marxist theory of imperialism and the uneven and combined development of capitalism. It situates the current crisis within the longer trajectory of European capitalism's rise and fall: from its origins in primitive accumulation through colonial looting, through its post-war reconstruction under the US security umbrella, to its present position as a declining imperialist power squeezed between a resurgent US protectionism and a rising Chinese monopoly capitalism.

The article deploys the concept of monopoly capitalism to explain why new European entrants like Northvolt cannot break into markets already dominated by Chinese giants like BYD and CATL. The massive scale of existing investment in physical capital and R&D effectively excludes newcomers — tariffs cannot dislodge established monopolies. This is a concrete application of Lenin's analysis of monopoly as the highest stage of capitalism, updated for the era of green technology and battery production.

The argument also implicitly draws on Marx's analysis of the tendency of the rate of profit to fall, though it does not use the term explicitly. The description of European companies hoarding cash, paying record dividends, and refusing to invest in new capacity — while factories run at 58 percent utilisation — is a portrait of overaccumulation: capital that cannot find profitable outlets for reinvestment in production.

Conjunctural Relevance

The article is written in January 2025 and directly addresses the immediate conjuncture. The specific data points are:

  • Volkswagen announcing tens of thousands of redundancies and three factory closures; BMW cutting 8,000 jobs; Bosch cutting 10,000; Ford cutting 4,000 in Germany.
  • European car industry capacity utilisation at 58 percent, compared to 66 percent in North America and a global average of 62 percent.
  • Europe's share of global vehicle sales falling from 31 percent in 2008 to 20 percent in 2023.
  • The EU's 20g CO2 per kilometre target for 2025, which most car companies will miss, leading to demands for delay and subsidies.
  • The Draghi report's call for an additional €800 billion per year in investment — 4.5 percent of GDP — at a time when governments and corporations are cutting.
  • European electricity prices for industry at 20 euro cents per kWh, more than double the US rate of 8 cents.
  • Energy-intensive industry production down 20 percent since the cutoff of Russian gas.
  • Northvolt losing €5 for every €1 of sales, with a $1.2 billion annual loss.
  • Trump's return to power and his threatened tariffs on European car exports to the US.

The article connects these immediate events to longer-term structural trends: the failure to invest in machinery and R&D compared to the US; the absence of European software, cloud computing, or AI companies; the loss of the Chinese market share from 25 percent to 15 percent; and the Chinese dominance of battery and solar panel production.

Where the Argument Continues

The article is part of a broader IDOM corpus analysing the crisis of European capitalism. The argument continues in several directions:

  • The political crisis of European nation-states: the article notes that France and Germany are in the midst of political crises, and the EU is becoming increasingly unpopular. IDOM articles on the French and German political situations — including the rise of the far right, the crisis of social democracy, and the fragmentation of the bourgeois parties — would develop this thread.

  • The Ukraine war and energy: the article treats the cutoff of Russian gas as an act of "industrial self-sabotage" and a demonstration that the nation-state and imperialism are barriers to development. IDOM's coverage of the Ukraine war and its economic consequences would provide the fuller geopolitical analysis.

  • The question of working-class strategy: the article ends with the call for a socialist federation of Europe. This is a programmatic position that is developed in IDOM articles on the European Union, the need for a revolutionary workers' party, and the perspective of socialist revolution.

  • The specific case of Northvolt: the article uses Northvolt as a case study in monopoly capitalism. IDOM may have or may produce further analysis of the battery industry and the difficulties faced by European attempts to break into it.

Connections

The article should be read alongside:

  • Mario Draghi's report on European competitiveness (2024), which the article cites extensively. The contrast between Draghi's reformist prescriptions and the Marxist analysis of their impossibility is instructive.

  • Wolfgang Münchau's Kaput (2023), which the article cites for its analysis of the German car industry's technological complacency.

  • Lenin's Imperialism, the Highest Stage of Capitalism, for the theoretical framework on monopoly capitalism and the rivalry between imperialist powers.

  • Trotsky's The Struggle for a Socialist United States of Europe, for the programmatic perspective the article ends with.

  • Other IDOM articles on the German economy, particularly those analysing the decline of the "German model" and the crisis of the export-oriented growth strategy.

  • IDOM's analysis of Trump's trade war and US-China rivalry, which provides the geopolitical context for Europe's squeeze.

Key Quotes

  1. "The car industry is struggling worldwide, but the crisis in Europe is particularly severe."

  2. "The central task of a capitalist company is not to ensure jobs, or a transition to electrical vehicles, but to make profits for their shareholders. By that metric, the European car companies are very successful at the moment."

  3. "This is what monopoly capitalism looks like. The massive investments that have gone into this industry already, in terms of physical capital as well as research and development, effectively excludes new entrants. Once a company becomes a monopoly somewhere in the world, no amount of tariffs is going to dislodge them from that position."

  4. "The European 'social model' is untenable on the basis of capitalism. European capitalism, once at the forefront, is now old and decrepit. The nation state has become an absolute fetter on its future development."

  5. "Europe is under threat of becoming an industrial graveyard. Only the working class can provide the way forward."

  6. "This act of industrial self-sabotage illustrates how the nation-state, and imperialism, are a barrier to the future development of Europe."