Carmakers in Europe, especially the legendary German auto brands are doubling down may bet that even if foreign players’ market share keeps shrinking, there will always be some space left for international players in China’s market.

Beijing, mindful of its own auto export ambitions, has an incentive to keep foreign OEMs engaged to head off protectionist pushbacks in third world markets like ASEAN nations.

And if others, like GM, Honda, Hyundai are to scale back investment, the double downers have a stronger shot at being among the three or four foreign “survivors” in China (probably BMW, Mercedes-Benz, Audi and Volkswagen).

Splitting the last 15–20% of the market among them could still be an attractive prize (after all, 10% of the China market equals 2 to 2.5 million sales units).

Double downers also seek to leverage China as a global innovation hub. They think that competition with Chinese auto brands (probably Chery Great Wall Motor, Geely and BYD) in third markets is inevitable, given that not all international markets will close themselves off to Chinese cars.

The only way to compete is hence to tackle Chinese competition head on and turn China into an innovation hub that helps lower costs not just in China but globally. VW, for example, is targeting a 40% cost reduction in China and is already exporting China-developed EV technology. Skoda is reportedly preparing an India-bound platform derived from VW’s new China architecture.

Not all agree with the double down approach. Ford CEO Jim Farley has cautioned against it: “If you just reinvest in a new cycle of EVs in China, there is no guarantee, or no data, that would suggest the Western companies win.”

The success of the double downers hinges on the next generation of flagship vehicles.

Meanwhile, German auto brands like Mercedes is betting on its new CLA, BMW on the Neue Klasse, VW on its ID.Aura, ID.ERA, and ID.EVO models, and Toyota on localised Lexus and bZ EVs.

These will reach the market in 2026 to 2027 and will provide an early verdict on whether doubling down can pay off or whether Jim Farley is right.

Even if these investments succeed, the strategy comes with trade-offs. Localising production reduces previously lucrative export earnings and value-add creation in Germany and Japan.

Partnerships where foreign OEMs are no longer the technology provider erode or even reverse royalty income. The component business where once highly profitable faces shrinking margins as Chinese suppliers dominate the EV ecosystem.

All this may mean that the double downers are also antagonising their home governments as their home operations are increasingly in competition with their China operations.