Shulou(Shulou.com)11/24 Report--

January 26, China's automobile industry has made great progress in the past few years, and domestic cars are becoming more and more competitive in the international market. Analysts estimate that China has overtaken Germany to become the world's second-largest passenger car exporter after Japan and is expected to become the world's largest car exporter.

Andreas Andreas Tatt, the manager of a greeting card company in Canterbury, UK, is very interested in buying electric cars. But after considering Tesla's Model 3 and Porsche Taycan, he chose a lesser-known model, the all-electric gold Polestar 2 made by Volvo and its parent Geely.

Tate, who waited four months to receive the car, said: "Polestar 2 has attracted a lot of attention, partly because of its color and partly because people don't know what it is. I did have concerns, such as possible quality problems." But after the test drive, any doubts about quality problems disappeared.

China has become the world's second-largest passenger car exporter as Chinese car brands attract more and more foreign customers like Tate, a milestone that could reshape the global auto industry. Overseas shipments of Chinese-made cars have tripled since 2020, reaching more than 2.5 million last year, according to the China passenger car Association.

This is similar to Germany, where car exports have continued to decline in recent years. China's exports still lag behind Japan, but it is already ahead of the United States and South Korea, suggesting that strong competitors to established car giants are emerging.

Chinese car brands are now the market leader in the Middle East and Latin America. In Europe, most of the Chinese-made cars sold are electric models from Tesla, as well as former Chinese-owned European brands such as Volvo, Mingjue and Dacia. The iX3, BMW's best-selling electric car in the world, is made only in China and exported to Europe.

A large number of local brands such as BYD and Xilai are also on the rise, with ambitions to dominate the field of new energy vehicles. With the support of Berkshire Hathaway, owned by Warren Buffett (Warren Buffett), BYD has attracted buyers of electric cars in developed countries such as Australia.

But according to Xu Haidong, deputy chief engineer of the China Association of Automobile Manufacturers, this is just the beginning. He said China aims to sell 8 million passenger cars overseas by 2030, more than double the current shipments in Japan.

The trend highlights that China is no longer the "workshop of the world" for low-cost consumer electronics devices, home appliances and Christmas toys. Chinese companies are moving up the manufacturing value chain, a key driver of economic growth, by moving to a highly competitive and tightly regulated market to produce more complex and sophisticated products. In fact, the Economic complexity Index (Economic Complexity Index) compiled by the Harvard growth Lab ranks China 17th in the world, up from 24th a decade ago. The index mainly analyzes the range of products exported by a country.

Ola Kallenius, chief executive of Mercedes-Benz, said at the Paris Motor Show last October: "We must pay attention to China's auto industry, and the competition is becoming more and more fierce. This is the most interesting period in the auto industry since the father of cars, Carl Benz, launched the first gasoline-engine-powered car in 1886, but it is also the most uncertain period."

However, the US does not seem to notice the surge in Chinese car exports, in part because the trend occurred during the epidemic and because Chinese carmakers are mainly focused on developing markets in Europe, Asia and Latin America. GM did sell about 40,000 Chinese-made Buick Envision compact SUV in the United States in 2021, but a number of factors are making the American market less attractive to Chinese automakers.

Entering the European market has always been the goal of Chinese enterprises. As early as the beginning of the 21st century, Chinese companies began to display their products at auto shows in continental Europe. Thanks to increased automation and the resulting standardization, analysts at Goldman Sachs say Chinese car brands have the highest robot usage in the world. With the improvement of vehicle quality over the past decade, Chinese cars have begun to pass safety tests in Europe. China's strict controls on air pollution have also helped most of its cars meet European emission standards.

"in order to compete against Chinese brands, we have to achieve a similar cost structure," Carlos Tavares, chief executive of Stellantis NV, said in an interview at a powertrain plant in Tremelli, northern France, on December 19, 2022. Or Europe will have to decide to close the market, at least to some extent, to its Chinese competitors. If Europe does not want to put itself in this position, we need to redouble our efforts on what we do. "

According to data released by Eurostat, 2021 marks a watershed year for Chinese car exports, with exports to the European Union soaring 156% to 435000 vehicles. But Agatha Kraatz, director of Rhodium Group consultancy, said the rapid growth of electric vehicle shipments in China could trigger a backlash in the EU. "this is partly because Chinese companies are getting better, but partly because of overcapacity in China," she said. this will be a pain point. "

The high-priced Polestar 2 star bought by British owner Tate is an exception, as China has previously tended to export relatively cheap cars. According to data provided by UN Comtrade, the average price of export passenger cars made in China in 2021 is about $13700, about 1/3 of that of German cars and about 30 per cent cheaper than Japanese-made cars. This means that Chinese cars are most likely to pose a threat to cheaper Japanese and Korean models rather than German brands.

China doesn't seem to be too worried about competition in the auto industry, at least for now. "it has been proved that the strength of a country's auto industry will eventually be tested by the international market," the official said. " She added that the government would encourage Chinese carmakers to acquire foreign companies.

After proving itself to be a reliable manufacturing center, China is taking the lead in moving into the next frontier-electric cars. Local carmakers find electric vehicle platforms relatively easy to master compared with complex internal combustion engines.

'switching to batteries means motors are no longer a huge advantage, 'said Alexander Klose, executive vice president of overseas operations at Aichi, a pure Chinese electric carmaker. Technically, this creates a level playing field. Aichi has sold thousands of cars in Europe.

Global efforts to cut carbon emissions and save the planet have prompted the Chinese government to subsidize electric car manufacturers and buyers, while a strong local supply chain makes electric cars made in China cheaper than anywhere else. Tesla's Shanghai plant produced nearly 711000 cars last year, accounting for 52 per cent of the company's global production. These measures have also spawned dozens of local manufacturers like Aichi. BYD, Weilai and Xiaopeng are all car companies with great potential.

BYD, which also makes its own batteries and chips, is now China's largest maker of electric cars. BYD is ambitious to become the Toyota of electric cars in the eyes of cheap buyers around the world, betting that its batteries and chips will help it achieve that goal.

"We are not hiding the fact that we are Chinese car companies and European consumers are getting used to the high quality of Chinese products," said Alan Visser, global head of Geely's electric car brand LinkedIn. The company says its leasing service has more than 180000 registered users in Europe. Geely also said it will export 190000 vehicles in 2022 and aims to reach 600000 vehicles a year by 2025.

China's carmakers have come a long way since exporting only a few thousand cars in the mid-1980s. The rapid growth of domestic demand made China the world's largest auto market in 2009. In 2018, domestic sales fell for the first time in nearly 30 years, while domestic cars are becoming more and more competitive in the international market.

Chinese automakers have foreseen the trend, said Stephen Dyer, a Shanghai-based managing director of consulting firm AlixPartners and a former Ford executive. "this period of rapid expansion is coming to an end, so they begin to focus on the international market," they said. "

China's supply chain is growing just as fast. Domestic companies can now produce almost all parts, including those that relied on imports until about a decade ago, such as high-strength steel and reinforced fiberglass. Affected by this, China achieved a trade surplus of complete vehicles and vehicle parts for the first time in 2021. However, these assembly lines still rely on advanced machines from Japan and Germany.

"China's auto industry seems to have undergone phased changes, with a long-term trend of increasing sales of Chinese brands around the world," Dell said. "

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