By ZHOU Shuqi
A well-documented price war has dominated China’s EV and ICE sales this year. Wherever there is war, there are bound to be casualties and the market in 2024 may be more of a struggle for survival than a battle for dominance.
WM Motor was unable to go public this year and filed for bankruptcy. Aiways, which owes several months of wages, has come to a standstill. Mitsubishi has vanished from China.
Traditional norms that have stabilized the auto industry for decades are being discarded. Indeed, the old ways may be the worst, forcing established players to fight on the same ground as startups. For the past year, it’s been nothing but cut.
Companies focus on whatever metric makes them look best, and for many market share is the top priority, but that’s a pretty brutal indicator. Audi marketing head YANG Siyao said he believes that price reductions hurt the brand image, which they may. But not much as bankruptcy.
Customers do not buy, take home, or drive around in brand images - they drive cars. Most customers prefer an extra bit of tech onboard or a few thousand yuan in their pocket to the warm fuzzy glow of a brand that prizes prestige over price.
For the past 30 years, China has been easy pickings for big car makers, but that table has turned. Last year, Stellantis spent 1.5 billion euros (US$1.6 billion, 12 billion yuan) on around 20 percent of Leapmotor.
In July, Volkswagen bought 5 percent of XPeng, an overseas carmaker after Chinese tech for the first time. Previously, these overseas operators were most interested in cheap labor.
In a weak equity investment market, internal collaboration within the supply chain is becoming a trend. Intelligence has replaced electrification as the core focus.
Revamping of sales channels has turned out to be not such an earth-shattering idea. Regardless of how companies want to sell their cars, customers want to go to the showroom, talk about the car, touch it and drive it. Regardless of what’s happening in the back office and down the supply chain, customers want traditional showrooms.
As the market begins to simmer rather than boil over, brands are focusing on efficiency. Nio has laid off many staff and postponed or reduced investments in projects that will not bear fruit within three years.
The era of joint ventures is well and truly over. The market share of domestic JVs has declined by 20 percent in the last three years. China Securities believes that some will exit the Chinese market soon.
A new wave of EV development may be beginning as established businesses in other sectors - Xiaomi and Huawei - dabble in the car industry. These tech giants kick up a publicity fuss, but will their cars be worth owning?
In the first half of the year, China passed Japan to become the world’s biggest car exporter, but the export path is already changing from complete vehicles to production capacity, in part to avoid or comply with, protectionist measures.
In September, the EU launched an investigation into Chinese electric vehicles, and in December, the US began increasing tariffs on Chinese electric vehicles.