Going Abroad: Chinese Auto Brands Light Up the South American Market
2024-08-27
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Source: Overseas Network
Data shows that from January to July this year, China's auto sales reached 16.31 million units, of which 3.262 million were exported. In other words, one out of every five cars sold was sold abroad.
"Brazil has a new wave of Chinese cars," said Tiago Luis Ferraz Pereira, a 38-year-old lawyer in Sao Paulo, who said he can now buy the car he wants for less. Six months ago, he spent 314,000 reais (400,000 yuan) to buy a Great Wall Motor Haval H6 instead of a more expensive BMW X3.
Chinese cars are now all over the world, and domestic automakers have different strategies for different market access policies and consumer habits in their global layout. Against the backdrop of tariffs imposed by the United States and protectionist measures taken by the European Union, China has made progress in the Latin American market by exporting electric vehicles and investing in local production.
In March this year, BYD's large-scale production base complex in Brazil officially started construction. The project will consist of three factories. On June 8, GAC International officially released three models in Peru, including a hybrid model. On August 7, MG Motors, a subsidiary of SAIC Group, announced plans to establish a Latin American hub in Mexico, including a car factory and a research and development center.
"In Brazil, Chinese companies are quietly taking over the positions of the Big Three." Nikkei Asia reported that Chinese automakers such as BYD, Chery Automobile and Great Wall Motors are turning their attention to South America. The share of Chinese electric vehicles in Brazil has been soaring, shaking the dominance of international manufacturers such as Fiat, General Motors and Volkswagen in the region. Driven by demand for affordable electric and plug-in hybrid vehicles, Chinese car sales in Brazil this year have reached eight times the same period last year.
Data released by the Brazilian National Federation of Motor Vehicle Distribution show that Chinese auto brands occupy three of the top 20 brands in terms of passenger car sales in Brazil in 2023. In the first four months of this year, China's passenger car exports to Brazil increased by 372.4%, with a total value of US$762 million, a record high for the same period in history.
Colombia's La Repubblica reported that Chinese electric vehicles, mobile phones and other products are popular in the country's market. Despite the downturn in the Colombian auto market in 2023, Chinese hybrid and electric vehicle sales reached 10,732 units, still accounting for 5.7% of the market share. According to data from the Chilean National Automobile Association, 35.4% of light and medium-sized vehicles sold in the country in 2023 were made in China. There are 33 Chinese auto brands sold in Chile.
Sun Xiaohong, secretary-general of the Automobile Internationalization Professional Committee of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, told the People's Daily Overseas Network that Chinese cars have been popular in the South American market for many years. In the early days, they benefited from the zero tariff of the China-Chile Free Trade Agreement. The quality and models of Chinese cars in the Chilean market were gradually accepted, and they ranked among the top. Later, through general trade and KD assembly models, they gradually expanded their sales in South American countries such as Brazil, Argentina, Peru, and Ecuador.
"The new energy market in South America is booming, and Chinese automakers have already seized the opportunity." A relevant person in charge of GAC International told People's Daily Overseas Network that GAC has now entered 65 countries and regions. In South America, GAC has entered markets such as Chile, Bolivia, Panama, Ecuador, Peru, Paraguay, and the Dominican Republic. Currently, GAC mainly exports complete vehicles in South America and is actively exploring local production opportunities.
Chinese auto brands hope to "show their strength" in the South American market, but they still face many challenges. According to Bloomberg, BYD and Great Wall Motors already dominate electric vehicle sales in Brazil. But in the Brazilian market, people mostly buy hybrid vehicles that run on gasoline or ethanol. Since electric vehicles only account for a small part of the local market, competition is bound to intensify, which will test the ability of Chinese companies to continue to expand their market share.
A BYD official told People's Daily Overseas that Chinese auto brands are facing differentiated challenges in the South American market, including differences in market environment and culture, and need to recruit and train local talents in related fields. At present, the local new energy penetration rate is not high, and the public's acceptance of new energy vehicles needs to be improved, and infrastructure construction needs to be strengthened. In addition, as many global auto brands compete in South America to seize the electric vehicle market, and even many auto brands build factories in South America, Chinese auto brands may face more intense market competition.
"Latin America has at least 60% of the world's lithium reserves, attracting investment from many international companies." Margaret Myers, director of the China and Latin America program at the U.S. think tank Trans-American Dialogue, wrote in an article on the Australian East Asia Forum website that the extent to which the investment of Chinese automakers will translate into economic upgrading or re-industrialization in the entire region depends on local investment and industrial policies, so ensuring value-added investment and technology transfer is crucial.
Yao Jingyuan, a special researcher at the State Council Counselor's Office, former chief economist of the National Bureau of Statistics, and a famous economist, told People's Daily Overseas Network that China's automobile exports have great potential. When it comes to China's automobile exports to the South American market, it is necessary to consider the matching of local infrastructure. "I think the Chinese automobile industry should not only export complete vehicle products, but also invest in building factories in South America, and at the same time help solve a series of problems such as employment, after-sales maintenance services, and brand building."
Chinese automakers are actively integrating into the local community and deepening local operations. According to BYD's head, the company has established a large-scale production base complex in Camacari, Brazil, with a planned annual production capacity of 150,000 vehicles, which is expected to create more than 5,000 jobs locally. A relevant person in charge of GAC International said that Chinese auto brands should focus on local operations and achieve deeper expansion in the South American market. South America has a rich and colorful cultural tradition, and football culture is particularly deeply rooted in the hearts of the people, known as the "national soul" of the region. The company is actively carrying out football marketing to accelerate brand penetration. By sponsoring the Chilean Cup, Chile's Colo-Colo Football Club, the Panamanian Football Association, etc., it organically combines brand concepts with football culture, conveys brand value to Latin American consumers, and enhances brand awareness and favorability.
Sun Xiaohong believes that China's unremitting efforts in vehicle configuration, product quality, and meeting user needs have been recognized by the local market. As the scope of cooperation continues to expand, investment in factory construction and industrial chain cooperation will provide new impetus for cooperation between China and South American countries in the automotive field. (Li Fang)
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