Report: where and how european luxury cars are manufactured

After the major scandal exposing the manufacturing of fashion and luxury accessories in China, labeled as “made in Europe,” we take an in-depth look at the European luxury car sector. European luxury cars are the result of highly complex global supply chains. Brands such as Mercedes-Benz, BMW, Audi, Porsche, Ferrari, Lamborghini, Bentley, or Rolls-Royce assemble their vehicles in Europe, but rely on a global network of suppliers and specialized factories. This report investigates where their most important components are made, which countries dominate the supply chain, who the key suppliers are, and how brands are adapting their strategies to Asian dependency. We also analyze where final assembly plants are located, as well as relocation, traceability, and sustainability initiatives, and future trends (electrification, automation, new materials) in high-end component manufacturing.

Main Components and Their Manufacturing

The key components of a luxury car include the powertrain (engines and transmissions), batteries in the case of electric vehicles, interiors (leather seats, plastics, decorative panels), electronics and sensors (including driver assistance systems), as well as safety and dynamic elements such as brakes and suspensions. Below we detail each component and where they are usually produced.

Engines (Power Units)

Engines are the “heart” of these vehicles and are often built in the brands’ own plants or in specialized subsidiaries in Europe. Ferrari, for instance, manufactures all its engines (V6, V8, and V12) at its Maranello plant in Italy. Lamborghini assembles its iconic high-performance V12s in Sant’Agata Bolognese, Italy. As for the German brands:

• Audi produces the vast majority of its combustion engines in Győr, Hungary, at the Audi Hungaria plant, considered the world’s largest engine factory (over 1.9 million engines produced in 2016). Since 2018, it also manufactures electric motors for e-tron models there.
• BMW manufactures engines in several locations, especially its Steyr, Austria plant, which is BMW Group’s largest engine plant, with around 4,700 employees producing over a million gasoline and diesel engines annually. BMW also produces engines in Munich and Hams Hall (UK), among others, and has integrated electric motor production in its European plants.
• Mercedes-Benz produces engines in Germany (e.g., Stuttgart-Untertürkheim, its historical engine hub) and expanded recently: since 2019 it assembles combustion engines in Jawor, Poland. Mercedes-AMG, its performance division, hand-assembles its high-performance engines in Affalterbach, Germany, following the “one man, one engine” principle (all AMG engines are built there).

Some collaborations are worth mentioning: Pagani (Italy) and Aston Martin (UK) use V12 engines supplied by Mercedes-AMG in Affalterbach. Engineering firms like Cosworth (UK) build bespoke engines for very limited series (e.g., Aston Martin Valkyrie). In summary, most European luxury car engines originate in Western Europe (Germany, Italy, UK, Austria) and sometimes Eastern Europe (Hungary, Poland), leveraging the region’s skilled labor and direct brand control over this critical component.

Transmissions (Gearboxes)

Transmissions (automatic, manual, or dual-clutch) often come from specialized European suppliers. German manufacturer ZF Friedrichshafen leads in automatic transmissions: it designed and produces the popular 8-speed automatic transmission (ZF 8HP) in Saarbrücken, Germany, used by many luxury brands (from BMW 7 Series and Rolls-Royce to Audi and Bentley). For instance, Rolls-Royce and Bentley use ZF automatic transmissions in their luxury sedans and sports cars.

Getrag (now part of Magna Powertrain), originally German, has supplied transmissions to many premium brands. Getrag produces dual-clutch transmissions (DCT) in plants like Modugno (Italy) and Irapuato (Mexico). Ferrari and Mercedes-AMG have relied on Getrag dual-clutch transmissions for some models (Ferrari California, AMG GT, etc.), generally produced in Europe (Getrag also had a German plant for high-torque transmissions).

In Italian sports cars, Graziano/Oerlikon (Italy) stands out as a supplier of special sequential transmissions: Lamborghini, for example, used an Italian ISR robotized gearbox in the Aventador. Aisin (Japan) also supplies automatic transmissions to some models (especially front-engine vehicles), although less common in the brands discussed here. In short, Germany and Italy are hubs for gearbox manufacturing for European luxury cars, via independent suppliers (ZF, Magna/Getrag) or internal production.

Batteries (Electric and Hybrid Vehicles)

With electrification, lithium-ion batteries have become one of the most strategic components. Traditionally, battery cells come from Asian manufacturers, but European brands are building a more localized supply chain. CATL (China) is one of the largest suppliers: it has signed agreements to supply cells to BMW (e.g., for the upcoming Neue Klasse range) and built its first European gigafactory in Erfurt, Germany, with BMW as a founding client. LG Energy Solution (South Korea) produces cells in a major plant in Wrocław, Poland, supplying models such as the Porsche Taycan and Audi e-tron. Samsung SDI (Korea) operates battery factories in Hungary, supplying BMW, Volkswagen, and others.

Luxury manufacturers also assemble batteries and modules internally or in local joint ventures. Mercedes-Benz, for example, has been assembling batteries since 2021 in Jawor (Poland) and operates battery plants in Germany (Kamenz, Stuttgart), China, the U.S., and other countries—creating a global network of at least nine factories. Audi assembles the e-tron battery pack in Brussels (Belgium), and Porsche manufactures battery modules for its Taycan in Stuttgart. While the cells often come from Asia, the pack assembly increasingly occurs locally to control quality and integrate the battery into the vehicle.

Eastern Europe is becoming a battery hub: beyond Poland and Hungary, Slovakia and the Czech Republic have announced investments in cell factories. This push aims to reduce dependency on Chinese manufacturers and secure supply as electric vehicle production expands. However, the dependency on raw materials (lithium, cobalt, nickel) persists, as most are refined in Asia. Brands are exploring direct mine contracts and recycling to ensure materials for the future.

Electronics, Sensors and Assistance Systems (ADAS)

Electronics is an area where the supply chain is global, but with strong influence from traditional European suppliers. German companies like Bosch and Continental lead in electronic modules (control units, injection, ABS, infotainment, etc.) and sensors (radar, ultrasound, ADAS control units). Valeo (France) stands out in driver assistance systems: for example, it supplies the LiDAR scanner in the new Mercedes-Benz S-Class for Level 3 automated driving. In fact, the 2021 S-Class was the first production car with Valeo’s LiDAR, highlighting how a European tech firm brings key innovation.

However, many electronic components originate from Asian technology. For example, the large 56” MBUX Hyperscreen in the Mercedes EQS is made by LG Electronics in South Korea. Infotainment modules and touchscreens in various luxury models (Jaguar, Cadillac, etc.) are also designed or produced by LG divisions. Microchips for advanced functions (from engine control units to driving assistants) are often designed in Europe or the U.S. but manufactured in Asia (Taiwan, South Korea), leading to bottlenecks during the 2020–2021 semiconductor shortage. In fact, the European automotive industry had to halt production lines due to chip shortages, revealing a high dependence on Asian manufacturers like TSMC (Taiwan).

European suppliers remain leaders in many areas: Bosch, Continental, and Valeo supply many of the sensors and electronic “brains” for premium vehicles. Specialized firms also provide specific components: for instance, HELLA (Germany, now part of Forvia) and Magneti Marelli (Italy, now Marelli) provide LED/matrix lighting systems for Audi, BMW, and Mercedes. Mobileye (Israel, part of Intel) supplies chips/cameras for autopilot to brands like BMW and Audi. NVIDIA and Qualcomm (U.S.) provide AI processors for next-gen autonomous systems (Mercedes, Jaguar Land Rover, etc. have announced collaborations). In summary, electronics in a European luxury car result from global collaboration: combined know-how from Europe and Asia, with production spread across continents—forcing brands to carefully manage logistics and component availability.

Interiors and Finishes (Seats, Leather, Plastics, Panels)

The interior of a luxury car is where craftsmanship and industrial manufacturing meet. Many interior elements (seats, dashboards, trim) are supplied by specialized companies, often located near the final assembly plants. Germany and Western Europe dominate the supply of high-quality automotive leather: Bentley, for example, uses only bull hides from select regions (e.g., southern Germany) for its upholstery, as bull hides are more uniform (not marked by pregnancies) and temperate climates reduce imperfections. British brands like Bentley and Rolls-Royce work with select European tanneries and use in-house teams to cut and stitch leather by hand at their factories in Crewe and Goodwood, respectively. At Crewe, up to 14 premium bull hides may be required to fully upholster the interior of a Bentley Mulsanne, with each leather inspected manually.

For seats and panels in high-volume models (Audi, BMW, Mercedes), large global suppliers are involved: Lear Corporation (U.S.) and Adient (a Johnson Controls spin-off, headquartered in Ireland) lead in premium seat manufacturing; Faurecia (France, now Forvia after acquiring Hella) produces interiors, door panels, and consoles for several European luxury brands. Magna (Canada/Austria) also has interior divisions supplying dashboards and trim. Even Chinese manufacturers like Yanfeng operate in Europe, supplying interior components for premium vehicles.

Refined materials require diverse origins: wood for decorative inlays often comes from managed forests in North America or Europe; Bentley, for instance, personally auctions noble logs for its unique wood veneers. For special detailing, boutique suppliers are used: Poltrona Frau (Italy) supplies leather to Ferrari and Maserati; Alcantara S.p.A. (Italy) makes the famous “Alcantara” microfiber used in steering wheels and sports seats (widely used in Lamborghini, Porsche, and AMG editions); companies like Brodosplit (Croatia) or Benteler (Germany) manufacture complex plastic and metal parts for luxurious interiors. Thus, although the final interior assembly usually takes place at the vehicle plant, the components come from a broad network: Western Europe for premium materials (leather, wood), Eastern Europe and North Africa for sewn or lower-cost plastic elements (taking advantage of labor), and increasingly global suppliers integrated to deliver complete modules (e.g., a turnkey seat with heating, ventilation, and built-in electronics delivered by Lear or Faurecia near the assembly line).

Brakes and Braking Systems

High-performance cars require advanced braking systems. Brembo, an Italian company, is the leading supplier of brakes for sports and luxury vehicles worldwide. Brembo manufactures aluminum monoblock brake calipers and discs (including carbon-ceramic) in Italy (Bergamo) and in international plants (it has factories in Poland, Mexico, the U.S., etc., although the highest-end brakes are usually made in Italy). Brands like Ferrari, Lamborghini, Porsche, Aston Martin, and certain Mercedes-AMG models equip Brembo brakes as standard. For example, the optional carbon-ceramic discs in Ferrari and Porsche are produced by Brembo-SGL, an Italian-German joint venture specialized in this composite material.

Other relevant brake suppliers include Continental-Teves (Germany), which provides complete ABS/ESP systems and brake actuators to BMW, Mercedes, and Audi; ATE (Germany, part of Continental) which produces discs and calipers for premium passenger cars; AP Racing (UK), focused on competition brakes (supplying special editions and motorsport teams, with some technologies migrating to street models). Akebono (Japan) has supplied high-performance braking systems to models like the Audi R8 and some AMGs in the past. However, Brembo remains the benchmark in the luxury/sport segment, with significant market share thanks to European manufacturers’ trust in its engineering. Its calipers may be manufactured in Italy or other global plants, but always under strict standards, as a supercar exceeding 300 km/h demands the highest quality brakes.

Suspension and Chassis Systems

Luxury car suspension systems must balance comfort and performance, relying on suppliers with specialized technologies. ZF, through its Sachs subsidiary (Germany), manufactures shock absorbers and active suspension systems (such as air suspensions and adaptive systems) for many premium manufacturers. For example, it supplies pilot-controlled shock absorbers to BMW and Audi. Thyssenkrupp Bilstein (Germany) is another traditional supplier of high-performance dampers, used in AMG models and Porsche (Porsche 911s have historically used Bilstein dampers), as well as other sport-oriented vehicles. Air suspension systems (Airmatic) in models like the Audi A8, Porsche Cayenne, or Range Rover are supplied by specialists like Continental (formerly part of its ContiTech division) or Dunlop Suspensions (now SASSC, Belgium).

For next-generation active suspension technologies, manufacturers are turning to global innovations. Delphi (U.S., now Aptiv/BWI) developed the Magnetorheological suspension (MagneRide), a system of dampers using magnetizable fluid employed by Ferrari, Lamborghini, Audi, and Cadillac, among others. After the division was sold, BWI Group (China) now produces these dampers in Europe (with a plant in the Czech Republic) and continues supplying MagneRide to Ferrari (e.g., 488 Pista), Audi (magnetic ride in TT RS, R8), and Lamborghini (Huracán).

Other chassis parts like suspension arms and subframes are typically manufactured near assembly plants by suppliers such as Magna, Benteler, or Gestamp (the latter is Spanish, with a strong European presence). Power steering systems are provided by Bosch (electronic systems) or ZF (complete active steering systems). In summary, suspension component manufacturing is concentrated in Germany (damping technology) and Central Europe, with contributions from American and now Chinese companies for advanced solutions. Luxury manufacturers integrate these components to achieve the expected dynamic behavior, adjusting each system in their engineering centers (e.g., Nürburgring for sports cars) after receiving components from suppliers.

Tires and Exhaust Systems

Other essential components not previously detailed include tires—where European brands work closely with manufacturers such as Pirelli (Italy), Michelin (France), and Continental (Germany) to develop custom compounds—and exhaust systems, often made by specialists like Akrapovič (Slovenia) and Eisenmann (Germany) in high-performance variants. Each element of a luxury vehicle is typically sourced from the best technical supplier globally.

Key Regions in the Global Supply Chain

While Europe remains the epicenter of luxury car production, several countries and regions play significant roles in various links of the supply chain:

Germany

Germany is the technological heart of the European luxury car industry. It hosts the headquarters of Mercedes-Benz (Stuttgart), BMW (Munich), and Audi (Ingolstadt), along with a vast number of suppliers. Engines, electronics, transmissions, and final assembly for key models take place here. For instance, AMG engines are built in Affalterbach, ZF transmissions in Saarbrücken, and final assembly plants include Sindelfingen (Mercedes S-Class), Dingolfing (BMW 7 Series), and Neckarsulm (Audi e-tron GT, R8). Germany also serves as a major R&D and quality standardization hub.

Italy

Italy stands out in the realm of exotic sports cars and high-luxury components. The factories of Ferrari (Maranello) and Lamborghini (Sant’Agata Bolognese) fully produce vehicles there, including engines and chassis. Italy also contributes top-tier suppliers: Brembo (brakes), Pirelli (tires), Magneti Marelli/Marelli (lighting, electronics), and Poltrona Frau (leather). Pagani handcrafts its hypercars in Modena using AMG engines from Germany. In short, Italy provides both dreamlike finished vehicles and components (brakes, tires, interior design) sought after by brands across Europe.

United Kingdom

Although many British brands are now foreign-owned, the UK remains a production base for Bentley (Crewe, England) and Rolls-Royce (Goodwood, England). Final assembly of these ultra-luxury vehicles takes place here, with high artisanal content (interiors, paint). The UK also has niche suppliers: Cosworth (special engines, Northampton), AP Racing (motorsport brakes), Connolly Leather (historical leather supplier, legacy in techniques). In addition, Aston Martin produces sports cars in Gaydon (England) and McLaren in Woking—though not mentioned earlier, both are part of the European luxury ecosystem. The UK contributes cutting-edge engineering (e.g. Formula 1) and limited-series manufacturing.

Eastern Europe

Over recent decades, Central and Eastern European countries have become industrial pillars due to their combination of lower costs and logistical proximity. Hungary is crucial thanks to Audi Hungaria in Győr (engines and assembly of models like the Audi TT and Q3). Slovakia hosts the mega-plant in Bratislava (Volkswagen Group), where large SUVs from multiple brands are built: Audi Q7/Q8, Porsche Cayenne, Lamborghini Urus, and Bentley Bentayga bodies share lines here. Since 2017, the Cayenne has been fully assembled in Bratislava, and the Bentayga bodies were originally built in Slovakia and shipped to Crewe. The Czech Republic, Poland, and Romania also host many supplier plants: Bosch has electronics factories in Hungary and Romania; VW/Porsche has a body plant in Slovakia for Lamborghini. Poland is home to Mercedes’ engine and battery plant in Jawor and various cable and electrical component factories. Russia no longer plays a role in luxury components due to sanctions. Slovenia contributes Akrapovič (exhausts), and Magna operates in Graz, Austria (near the East), assembling vehicles for third parties (e.g., Mercedes G-Class, BMW Z4/Toyota Supra).

China and East Asia

China is both a market and a producer within the supply chain. All major European luxury brands have joint ventures in China to locally assemble models destined for that market (due to tariffs): BMW produces long-wheelbase Series 5/7 in Shenyang, Mercedes-Benz builds long E and S-Class models in Beijing, and Audi assembles A6L, Q5, and e-tron in Changchun and FAW-VW Foshan. These Chinese plants are mainly for domestic consumption but represent significant volume. In terms of components: China dominates the refining of raw materials (lithium, cobalt) essential for batteries and provides a large portion of electronics (basic chips, PCBs). CATL (China) is a leading battery supplier, and Chinese companies (e.g., Yanfeng in interiors, BWI in suspensions) are part of the European supply chain. South Korea and Japan are critical for battery manufacturers (LG, Samsung, SK) and electronics (memory chips, optical sensors). A large share of automotive semiconductors comes from Taiwan (TSMC) and Malaysia (chip assembly), highlighting Europe’s recent vulnerability. Thus, East Asia is both an indispensable partner and a risk hotspot (due to geopolitical and trade tensions) in the supply chain.

North America (USA and Mexico)

German brands have invested heavily in North American production to serve the local market. The United States is home to BMW’s Spartanburg plant in South Carolina, which assembles SUVs (X5, X6, X7) for global distribution—it’s BMW’s highest-volume factory worldwide. Mercedes-Benz operates a plant in Tuscaloosa, Alabama for SUVs (GLE, GLS) and opened an adjacent battery factory in 2022. Audi manufactures the Q5 SUV in San José Chiapa, Mexico for global export. In 2019, BMW launched a factory in San Luis Potosí, Mexico to build the 3 Series. While these facilities rely heavily on components imported from Europe (engines, transmissions, interiors), they have also fostered local supply chains: seat and cable factories in Mexico, and U.S. suppliers providing steel, glass, and more. North America plays a key role not only in final assembly for certain luxury models but also in high-tech components—many NVIDIA, Intel, and Qualcomm chips originate in the U.S., along with connected vehicle software.

Other Regions

Japan supplies specific components: Denso provides sensors to some European brands; Aisin produces automatic transmissions as previously mentioned. Sweden and Finland contribute raw materials (battery metals) and companies like Northvolt (Sweden), which manufactures battery cells. Canada/Austria (via Magna) handle engineering and contract production. Spain plays a minor role in the luxury segment (it assembled the Audi Q3 in SEAT Martorell and currently supplies chassis components via Gestamp) but lacks dedicated plants for luxury brands. South Africa assembled the BMW 3 Series for years (Rosslyn Plant), and Brazil once hosted local Audi/Mercedes production for its domestic market, though with limited scope in the luxury segment.

Conclusion

Germany and Italy remain the cornerstone nations within Europe for both critical components and finished luxury vehicles, supported by neighboring and Eastern European countries for auxiliary and volume production. Asia (China, Korea, Japan) supplies the new “raw materials” of technology (batteries, chips) and hosts joint-venture factories, while North America features satellite plants to serve its market. This geographic diversification aims to balance costs, tariffs, delivery speed, and technology access.

Highlighted Suppliers by Component

Throughout the luxury car components supply chain, certain Tier 1 suppliers stand out for serving multiple manufacturers.

As shown, the European supply industry (Germany, Italy, France, UK) excels in nearly every category, explaining why ~77% of BMW’s suppliers are in Europe (43% in Germany alone). However, globalization has brought in players from Asia and North America, especially in emerging fields (batteries, semiconductors, displays). Luxury brands manage hundreds of suppliers; BMW reports having over 100 key global suppliers. Mercedes and Audi have similar figures, highlighting the complexity of ensuring quality and timely delivery for each component.

Final Assembly: Where Are Luxury Cars Built?

The final assembly of luxury vehicles usually occurs at the brand’s historic plants in Europe, though there are key exceptions with overseas factories.

As observed, Germany, Italy, and the UK remain the most prominent final assembly sites for European luxury cars, preserving the cherished “Made in Germany/Italy/UK” aura. However, global production is now a reality for certain models—SUVs are at the forefront of this (assembled outside Europe to be closer to key markets). For instance, the Bentley Bentayga began with bodies made in Slovakia, Porsche Cayenne shifted its full assembly to Slovakia in its third generation, and the Mercedes GLS is made exclusively in the U.S. Meanwhile, Ferrari and Lamborghini have avoided offshore manufacturing, preserving their territorial exclusivity.

Each car group optimizes its network: Volkswagen Group splits platforms between Germany (sedans) and Slovakia (large SUVs), giving Bentley/Lamborghini access to shared resources; BMW Group uses its U.S. plant as a base for X-model SUVs while keeping Munich/Dingolfing for sedans; Mercedes-Benz concentrates sedans in Stuttgart and sends SUV production to Alabama. Even when assembly is outside Europe, critical systems often ship from Europe (e.g., a twin-turbo V8 from Germany installed in a U.S.-built GLS). Global logistics are complex but allow brands to serve local markets, avoid import duties, and leverage local incentives.

Asia Dependency

Despite Europe’s industrial strength, luxury brands remain highly dependent on Asia for tech components and raw materials. Most automotive microchips come from Asian foundries (Taiwan, South Korea, and to a lesser extent China and Malaysia). TSMC (Taiwan) is the global leader. The 2020–2021 chip shortage forced production halts at Mercedes (Rastatt), Volkswagen (Wolfsburg), and Audi (Mexico), exposing excessive reliance on Asia. Europe has limited domestic chip manufacturing capacity (e.g., Infineon in Germany, STMicroelectronics in France/Italy) and lags behind consumer electronics in chip priority. The EU has launched the European Chips Act to attract investments from TSMC, Intel, and Samsung.

Batteries and critical materials: Asia (China, Korea, Japan) dominates lithium-ion cell production. CATL, LG, Panasonic, SK supply most batteries for European vehicles. China refines 60–70% of battery-critical minerals (lithium, cobalt, rare earths), shaping the supply chain. Even minor materials (foam, chemicals) are often sourced from Asia, causing global disruptions during pandemic shutdowns.

Integrated consumer electronics: Displays, audio systems, and connectivity modules are typically developed by Asian firms. For instance, the Mercedes Hyperscreen is built by LG. Sensors and camera modules include components from Japan and Korea. Connectivity tech (WiFi, Bluetooth) shares supply chains with smartphones, again led by Asia.

Cheap labor and subcomponents: Many low-cost but essential parts (connectors, relays, basic chips, motors) are mass-produced in China, Thailand, and Vietnam. These commodity parts are invisible yet essential. During China’s COVID lockdowns, production delays rippled across European factories dependent on such supplies.

This dependency caused delivery delays (e.g., model waitlists due to chip shortages) and poses a strategic risk: geopolitical tensions (EU–China, China–Taiwan) could threaten supplies. Luxury brands, which sell exclusivity and cutting-edge technology, must ensure these dependencies don’t compromise their production or quality standards.

Still, Asia offers advantages: economies of scale and fast innovation (e.g., low-cost LFP batteries from China). Hence, European automakers are adopting a dual sourcing strategy—continuing to buy cutting-edge Asian tech (e.g., new CATL cylindrical batteries for BMW) while developing local alternatives.

In summary, dependence on Asia is especially critical in semiconductors and batteries—the “brain and heart” of modern cars. Europe is investing to produce locally (chips, battery gigafactories), but for this decade, the supply chain for luxury cars will remain closely tied to Asia.

Relocalization, Traceability, and Sustainability Strategies

Given the above risks, luxury car brands are implementing strategies to reshore production, enhance traceability, and improve supply chain sustainability:

• Reshoring and regionalization: Brands aim to “bring production closer to the consumer” and final assembly plants. Mercedes-Benz, BMW, and Audi are investing in European battery plants to reduce reliance on Asia. Mercedes built its ninth battery plant in Poland, and BMW is a key customer of CATL’s plant in Germany. After the chip crisis, brands back semiconductor plant projects in Germany, France, and Italy with Intel, TSMC, and others. Reshoring also includes expanding East European plants for tasks formerly done in Asia—like wiring harness production in Morocco or Romania, or plastics in Poland.
• Supplier diversification: Brands seek multiple suppliers for critical components to avoid regional dependency. BMW signed battery deals with both CATL (China) and Northvolt (Sweden); Mercedes works with CATL and Envision AESC (Japan, with a plant in France). In semiconductors, OEMs are signing direct deals to reserve fab capacity. Bosch, for example, opened a power chip plant in Dresden in 2021 to support Daimler and VW.
• Chain traceability (transparency): Automakers want ethical and sustainable sourcing of materials. BMW’s “PartChain” blockchain initiative tracks components and raw materials across global supply chains. This allows near real-time traceability from mine to factory. Volvo Cars pioneered blockchain cobalt tracking. Super-luxury brands like Rolls-Royce and Bentley demand certified origin for wood (to avoid illegal logging) and leather (sourced from meat byproducts and eco-tanneries). Traceability becomes an ethical and quality assurance tool—vital when selling €200,000 vehicles.
• Sustainability and carbon footprint: Luxury brands are setting decarbonization goals. One strategy is using “green” materials from local suppliers. Mercedes-Benz sources low-CO₂ steel from European mills and plans to use fossil-free steel from SSAB (Sweden) by 2025. It announced plans to buy 200,000 tons/year of low-carbon steel from suppliers like SSAB, Salzgitter, Thyssenkrupp, and H2 Green Steel. BMW and Audi have similar partnerships for aluminum and steel made with renewable energy. Plants like Audi Brussels (e-tron) and Porsche Zuffenhausen (Taycan) run on 100% renewable electricity and biogas, achieving certified carbon-neutral production.
• Local vs. balanced globalization: Brands now recalibrate what to produce locally vs. outsource. Tesla’s Berlin Gigafactory integrates battery and car production, offering logistical advantages. Ferrari plans to assemble its own EV battery packs and electric motors in Maranello. VW Group created its Cariad unit to develop in-house software and certain chips, reducing long-term dependency. This reflects a trend toward “technological reshoring”—bringing critical know-how (software, batteries, chips) back in-house, while outsourcing commodity parts.

In essence, luxury carmakers aim to fortify their supply chains against disruption while enhancing transparency and sustainability. This involves local investment (sometimes via foreign partners), digital tools for part tracking, and environmental demands on suppliers (renewable energy, recycled materials). Without compromising exclusivity—Rolls-Royce won’t lower wood or leather quality—but it ensures origins are responsible and impact is minimal.

Future Trends in High-End Component Manufacturing

Looking ahead, the European luxury car industry faces several transformative technological shifts that will reshape component manufacturing. Key future trends include:

• Full electrification of powertrains: Iconic combustion engines (V12, W16) will give way to high-performance electric motors. Electric motor and inverter manufacturing will become central. Audi, BMW, and Mercedes are already converting engine plants to EV production. BMW Steyr will make over 600,000 electric motors annually by 2025, integrating motor and transmission in Austria. Ferrari and Lamborghini will debut hybrids and EVs later this decade, likely building high-performance EV components in-house to preserve their unique driving feel. The battery will become the flagship component, with gigafactories producing ultra-dense cells for supercars. Expect advanced chemistries (e.g., solid-state) to emerge by 2030, driven by investments from BMW, Lexus/Toyota, and others.
• Factory automation and digitalization (Industry 4.0): Luxury car plants increasingly use cobots and smart tools, without eliminating handcrafted quality (e.g., Rolls-Royce paint polishing remains manual). Mercedes-Benz and SEAT use intelligent assembly lines that auto-adjust to vehicle variants. AR and digital twins help train teams for complex installs (like custom interiors). Blockchain traceability is part of this digital push. Autonomous logistics (e.g., AGVs in BMW plants, future interplant trucks) boost efficiency while maintaining luxury standards.
• New materials and manufacturing techniques: Lightweight strength remains key. Carbon fiber and composites will be used beyond supercars. BMW’s 7 Series “Carbon Core” showed industrial use of carbon alongside steel/aluminum, saving 130 kg. More structural carbon fiber parts will appear in sedans and SUVs. Hybrid composites (plastic/glass/carbon fiber blends) will reduce weight in doors, seats, subframes. Sustainable materials will also rise: Mercedes uses recycled interior plastics; Bentley explores vegan leather from grapes or mushrooms. 3D-printed metal parts—like Bugatti’s titanium brake calipers—offer customization and weight savings. Additive manufacturing will support bespoke parts (e.g., clock bezels in Rolls-Royce) and complex lightweight components (intake ducts, brackets).
• Cross-sector collaboration and modularity: As autonomous and connected vehicles evolve, luxury brands partner with tech firms. Expect on-site fab labs producing custom ADAS modules or processors. Shared EV platforms (like Audi/Porsche PPE) will allow centralized production of core modules with localized luxury customization.
• Sustainability as a new luxury standard: Future luxury will highlight sustainability: “This car uses recycled aluminum, zero-emissions manufacturing, chrome-free vegetable-tanned leather.” Brands are investing now to deliver that narrative. Volvo and Polestar already aim for climate-neutral cars. Traditional luxury names are following suit to stay relevant to eco-conscious clients.

In conclusion, high-end component manufacturing is evolving into a blend of high tech and sustainable craftsmanship: electric motors built with Swiss precision, carbon-aluminum chassis, luxurious yet eco-friendly interiors—all assembled in smart, carbon-neutral factories uniting robots and artisans. Europe, with its legacy of quality and tech investment, is poised to lead—if it secures the new luxury “raw materials”: electrons (batteries) and bits (software and chips), not octane. Europe’s storied luxury automakers are embracing this shift so that tomorrow’s luxury car will be electric, connected, lightweight, and sustainable, without losing its heritage of exclusivity and engineering excellence.