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michael dunne, ceo of automotive consulting firm dunne insights, said that foreign automakers that once "made more money than god" in china suddenly found that their market share in the chinese market had disappeared. now "the new center of the world's automotive industry is china." "everyone is trying to accept this fact: where do we go from here? how do we compete with the chinese?"

the days of "making more money here than god" are over

cnn analysis said that the latest sign of severe challenges facing traditional foreign automakers appeared on september 2. germany's volkswagen group announced that day that in view of the current "extremely tight financial situation", they are considering closing their factories in germany. this is the first time the company has made such a decision in its 87-year history.

in china, its largest single market, volkswagen, which once held the title of “sales champion”, lost the title it had held since 2000 last year. according to reports, volkswagen’s deliveries in the chinese market fell by more than a quarter in the first half of this year.

volkswagen is not the only foreign automaker experiencing declining sales in the chinese market. foreign automakers such as general motors of the united states, ford motor company of the united states, and toyota motor corporation of japan are also losing ground in the chinese market.

the washington post reported that gm sold more than 4 million vehicles in china in 2017, its peak year, but last year, the company's sales in china were only half of what they were in 2017. ford's sales in china last year fell 28% from two years ago, and its market share fell below 2%, less than half of that in 2016. cnn said that in the second quarter of this year, toyota's joint venture revenue in china plummeted 73% year-on-year.

data from the china passenger car association (cpca) showed that foreign automakers accounted for 33% of china's auto sales in july this year, while in july 2022 the proportion was 53%.

comparison of chinese and foreign automakers' market share in china in 2022 and 2024 cnn map

analysts point out that if the current trend continues, some foreign automakers, including american ones, may be squeezed out of the chinese market.

cnn said that the first 20 years of the 21st century was the "golden age" for foreign automakers in china. gm established its first partnership in china in 1997, and since then its sales and profits in the chinese market have continued to grow, enjoying huge economic returns. dunn told cnn that a foreign auto executive once said, "we make 'more money' here than god."

now, dunn said, the days of foreign automakers enjoying high growth rates and huge profits in china are over. he said years of winning in the fuel vehicle market had lulled foreign automakers into complacency, and they were caught off guard by electric vehicles, and they suddenly found their market share disappearing.

"foreign automakers are lagging behind in the key aspects of manufacturing electric vehicles"

around 2015, the chinese government began to provide financial support to local electric vehicle manufacturers and battery manufacturers. thanks to this, chinese auto brands have taken advantage of electric vehicles to "overtake on the curve" and rise strongly.

last year, byd sold a record 3.02 million vehicles worldwide, including plug-in hybrids, compared with 1.02 million electric and plug-in hybrid vehicles delivered by volkswagen and 1.8 million electric vehicles sold by tesla.

cnn pointed out that foreign automakers are lagging behind in all aspects that are crucial to manufacturing electric vehicles, from production speed and supply chain to battery technology and automotive software.

a new energy vehicle manufacturing workshop in ganzhou economic and technological development zone, jiangxi province visual china

according to research by global management consulting firm alixpartners, it takes about 40 months for traditional chinese auto brands to develop new models, while chinese new energy vehicle manufacturers have cut this time in half to about 20 months. foreign automakers are also launching new new energy vehicle models at a much slower pace, and chinese new energy vehicle technology and batteries are about two to three years ahead of foreign new energy vehicles.

tu le, founder of consulting firm sino auto insights, told cnn that foreign auto executives can't come to china every year to see what's going on. when they finally realize their companies have fallen behind, it's almost too late to make up for lost ground.

china has always been the world's major automobile market and a manufacturing center for the automobile industry. the wall street journal pointed out that given this, it is difficult for global automakers to leave china. cnbc reported that some foreign companies are trying to reintegrate into the chinese market by cooperating with local brands.

last year, volkswagen and china's xiaopeng motors signed a cooperation agreement to invest $700 million in xiaopeng to jointly develop new cars. in april this year, the two sides further expanded this cooperation. after that, the italian-american-french joint venture auto giant stellantis group acquired a 20% stake in china's leapmotor.

reuters reported in april that european and japanese automakers were "eagerly looking for chinese partners" at this year's beijing auto show. nissan announced a partnership with chinese technology company baidu to conduct research on artificial intelligence and smart cars. toyota also announced a similar partnership with tencent and said it would use tencent's technology in chinese-made passenger cars sold this year. french renault group is also reportedly in "key dialogues" with ideal auto and xiaomi to explore cooperation in the field of smart car technology.

"where do we go from here? how do we compete with the chinese?"

at the same time, chinese automakers are looking to the world and expanding rapidly. byd plans to build factories in thailand, turkey, hungary and other countries. at the end of last month, the company also announced that it would acquire its german distributor hedin electric mobility to expand its scale in europe.

wells fargo securities data shows that in the past five years, chinese automakers have seen a sharp increase in their share of many overseas markets. the market share of chinese-made cars has increased from 3% to 10% in thailand, from 1% to 9% in australia, and from zero to 13% in mexico. in russia, the market share of chinese cars has jumped from nearly zero to more than one-third.

on july 2, 2024, electric vehicles made in china were docked at the nansha automobile terminal in guangzhou for loading. visual china

cnn cited data saying that china exported 4 million passenger cars last year, up more than 60% year-on-year. by some standards, this means that china has surpassed japan and germany to become the world's largest automobile exporter. among them, 1/4 are electric vehicles.

ubs predicts that by 2030, chinese automakers' share of the global electric vehicle market could double to about one-third.

this has aroused the vigilance of the united states and western countries. on may 14 this year, the us government announced that it would increase the tariff on chinese electric vehicles from 25% to 100%. in june this year, the european union announced that it would impose a tariff of up to 38% on electric vehicles imported from china after an anti-subsidy investigation. at the end of last month, canada also followed the united states and imposed a 100% tariff on electric vehicles imported from china.

dai jiahui, co-head of greater china at alixpartners and head of the automotive industry in asia pacific, analyzed that the wave of tariffs may accelerate the localization production of chinese electric vehicle manufacturers in europe, thereby reducing transportation costs, so even with the existence of eu tariffs, chinese cars will still make a 20% profit.

china has repeatedly expressed strong dissatisfaction and resolute opposition to the tariffs imposed by western countries on chinese electric vehicles.

on september 3, in response to the canadian government's practice, the chinese ministry of commerce announced a number of countermeasures - launching an "anti-discrimination investigation" on the relevant restrictive measures taken by canada; launching an anti-dumping investigation on canola imports from canada; launching an anti-dumping investigation on relevant canadian chemical products based on domestic industry applications; and intending to bring canada's relevant practices to the wto dispute settlement mechanism. analysts pointed out that this is the first time that china has launched an "anti-discrimination investigation", and it is also the first case in the world. the direction is clear and the counter-attack attitude is clear.

"the new center of the world's auto industry is china," dunn said, adding that every foreign automaker is trying to come to terms with: "where do we go from here? how do we compete with the chinese?"

source | observer.com