German carmakers still build the best combustion engines in the world. But on the technologies now defining the next decade of the industry, battery electric vehicles, software-defined architecture, and autonomous driving, China has already pulled ahead. In a recent episode of the Beyond Cost podcast, Prof. Dr. Martin Koers joined our host Jakob Etzel, VP Customer Success at Tset, to discuss why speed, not technology, has become the real dividing line between German and Chinese carmakers.
For seventeen years, Prof. Dr. Martin Koers held roles in communication and industry affairs, and most recently as managing director, at the VDA (German Association of the Automotive Industry), representing every German carmaker, truck builder, and supplier. In that role, he flew to China regularly for motor shows and government meetings. Back then, he thought he understood the country. But upon the move to Shenzhen to teach at Shenzhen Technology University, he realized how much he had missed.
In this episode, Martin Koers discusses what changes when you make the switch from visiting China to actually living there, and why he believes the gap between German and Chinese carmakers comes down to speed.
The China Shock Nobody Should Have Seen Coming
Frequent business trips and an office in Beijing and Shanghai had convinced Martin Koers he understood the country. Living there showed him the real distance between flying in for a motor show and actually experiencing daily life in China. The so-called 9-9-6 work culture, nine in the morning to nine at night, six days a week, is not a rumor, he says. It is the everyday reality his students and neighbors describe without complaint.
That intensity is now showing up in German boardrooms as what industry insiders now call the "China shock": a sudden realization that German market share in China has declined, and that BBA, the shorthand Chinese consumers use for BMW, Benz, and Audi, no longer signals what it used to among young buyers.
Young Chinese buyers still respect German brand quality, Martin Koers says, but they now associate it with their parents' generation, not with a "computer on wheels." Chinese brands, in their eyes, are the smarter choice.
Zero Tolerance for Weak Companies
Martin Koers pushes back on one of the biggest misconceptions he hears from people outside the industry: that China's economy is centrally planned in a way that leaves no room for competition. In his view, it is the opposite. China's five-year plans set a clear destination, but the government deliberately lets the market decide who gets there.
That is why there are currently hundreds of Chinese car brands on the road, far more than Koers, a lifelong automotive professional, can keep track of. He expects most of them to disappear, and says the government knows this and allows it to happen on purpose. The manufacturers that survive that shakeout emerge genuinely strong. As Koers points out, BYD summed up that mentality at the Beijing Motor Show with a slogan that could not sound less communist: "Survival of the fittest."
For anyone assessing which Chinese suppliers or manufacturers are worth building a long-term relationship with, that distinction matters. The brands standing in five years will be the ones that outcompeted hundreds of others, not the ones the government simply picked.
Germany Wins on Combustion, But China Wins on Everything Else
Martin Koers breaks the comparison between the two countries into four areas: combustion technology, battery electric technology, product-market fit for Chinese consumers, and overall organizational efficiency. His scoring is blunt.
Combustion engineering remains a German strength that Martin Koers considers nearly impossible to challenge, decades of refinement that China deliberately chose not to compete with. Instead, China leapfrogged straight into battery electric vehicles, a technology where no incumbent had a head start to defend. On product-market fit, Koers argues that many Western electric models still miss what Chinese buyers actually want: heavier software, more connectivity, a genuinely different driving experience, not just a new powertrain under a familiar shape.
The fourth category, organizational overhead, is where the story turns structural rather than technical. German manufacturers know their cost base and internal processes need to change. The harder part is executing that change inside companies built around a hundred years of legacy thinking. Volkswagen's response was an "in China, for China" strategy: developing cars in China, with Chinese engineering teams, specifically to fit Chinese customer preferences. Koers expects that strategy to reach far beyond China's borders.
In other words, the cars German manufacturers design in China for Chinese buyers will not stay in China. Martin Koers expects them to eventually be exported and sold in Europe and other markets too, meaning the "in China, for China" approach may quietly become "in China, for everyone."
Disruption, Not Innovation
Martin Koers draws a sharp line between innovating and disrupting. Streaming did not improve the video store; it replaced it. Airbnb and Uber did not improve hotels and taxis; they created new markets those industries were not built to compete in. He points to Xiaomi, a smartphone maker with no automotive history, entering the car market and producing a vehicle that German test magazines compared favorably to a Porsche.
That kind of speed to brand credibility, Koers argues, is only possible inside a genuinely disrupted market. He counts three disruptions happening at once in the car industry: the shift from combustion to battery electric, the shift from cars assembled around separate supplier software to cars architected from a single software system from the start, and the earliest stages of autonomous driving, which he now sees running on Shenzhen streets daily.
Why Chinese Manufacturers Develop Cars Faster
Chinese manufacturers bring a new car to market far faster than German ones, and Martin Koers points to four compounding factors rather than one.
Centralized decision-making removes layers of internal debate, so execution starts sooner. A cultural willingness to work, the 9-9-6 mentality, means holidays get made up rather than extended. Consumer adoption moves faster too. China is already a cashless society with little public debate about it, and Koers contrasts Germany's cautious ethical discussions about elder-care robots with China's straightforward embrace of the technology to address the same demographic problem. Finally, the development process itself differs: German manufacturers still largely follow the traditional V-model, where components are developed, tested, and integrated in sequence, while Chinese manufacturers building software-defined vehicles from scratch started with a more agile process from day one, without a legacy structure to unwind first.
What This Means for Cost Engineers and Procurement Leaders
Martin Koers is careful not to frame this as a call to abandon German engineering discipline. The advice he gives is narrower and more useful for anyone running purchasing or cost engineering today: keep the quality standard, add the speed.
That does not require a bigger budget, Martin Koers says. It requires a mindset shift that individual purchasing leads and cost engineers can start on their own: faster decisions, less internal debate before acting, and a willingness to treat structure and culture, not just strategy, as something that has to change.
Koers keeps coming back to the innovator's dilemma, the same trap that caught Nokia and Kodak off guard after decades of dominance. Past success can blind a company to the moment it needs to change. German manufacturers, in his view, are not blind to that risk. China is the only topic on their minds right now, and that pressure, uncomfortable as it is, may be exactly what closes the gap.
Listen to the Full Episode
This article draws on a longer conversation between host Jakob Etzel, VP Customer Success at Tset, and Prof. Dr. Martin Koers on the Beyond Cost podcast.
Listen to the full episode to hear more, including Koers' view on whether China's five-year plans are a roadmap the West should simply be reading, how a new business simulation program is pairing German and Chinese students on mixed teams to run a virtual car company together, and his rapid-fire take on Munich versus Shenzhen, BYD versus Tesla, and the one book everyone in this industry should have already read.
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