China will become the world's largest car exporter: how many hurdles do Chinese cars need to cross to "conquer the world"?

In 2023, China's automobile industry will move forward at an unprecedented speed - volume products, volume technology, volume price, volume industry chain upstream and downstream, "involution" is becoming more and more intense while accelerating "external rolling", industrial transformation, overseas speed, etc., to accelerate the transformation of the automobile industry. In particular, it is worth mentioning that in the new era of electrification and intelligence, Chinese auto brands have begun to emerge in the global auto market and gain attention.

At the 2023 Shanghai Auto Show, executives of multinational auto companies returned to China after a three-year absence, but at this moment they saw a completely different Chinese auto market, and they must reevaluate the new strategy and new way of playing for China. On January 2, 2024, Tesla released sales data, its car delivery volume in the fourth quarter of 2023 was 484,500 units, and the annual delivery volume was 1,808,600 units, and the "line-up" completed the delivery target of 1.8 million units, while BYD's pure electric model sales in the fourth quarter were 526,400 units, and the global pure electric sales champion in the fourth quarter changed hands to BYD......

In the first half of 2023, China has successfully overtaken Japan to become the world's largest auto exporter. Although the 2023 full-year auto export data has not yet been released, China's annual auto export volume has almost undoubtedly surpassed Japan to become the largest auto exporter. Recently, at the 2023-2024 China Economic Annual Conference, Han Wenxiu, deputy director of the Central Finance Office in charge of daily work and director of the Central Agricultural Office, introduced that the mainland's automobile exports will exceed 5 million units in 2023, setting a new historical record.

China's auto exports in 2024 are also expected to be higher. According to the China Association of Automobile Manufacturers (CAAM), China's auto exports will increase to about 5.5 million units in 2024.

Exports into an important increment

After more than 10 years of silence, China's automobile exports abroad are booming again.

According to the data of the China Association of Automobile Manufacturers, in 2012, the export of automobiles in mainland China exceeded 1 million, and then declined all the way, gradually rebounding from 2016, and hovering around the scale of one million vehicles in 2018~2020. In 2021, Continental exported 2.015 million vehicles, doubling the year-on-year increase, ending years of hovering between highs and lows. Subsequently, from 3 million units in 2022 to about 5 million units in 2023, China's automobile exports have achieved a triple jump, surpassing Germany and Japan successively, and striding into the global market.

According to data from the China Association of Automobile Manufacturers, in January ~ November 2023, China's automobile exports reached 4.412 million units, a year-on-year increase of 58.4%. In January ~ November 2023, 3.32 million traditional fuel vehicles were exported, up 51.5% year-on-year, and 1.091 million new energy vehicles were exported, up 83.5% year-on-year, 30 percentage points higher than fuel vehicle exports.

In fact, for more than ten years, Chinese cars have been full of twists and turns in the process of going overseas, such as the first passenger car crash test exported to Europe suffered a blow to the head, the booming and piled up exports of Russia, Brazil and other markets encountered "Waterloo", and it was difficult to open up the situation in the Southeast Asian market where motorcycles had failed.

Around 2004~2008, China's automobile exports were also booming, but at that time, the main force of mainland automobile exports was commercial vehicles, and the export areas were mainly developing countries and emerging markets such as "Asia, Africa and Latin America". In 2021, passenger cars will become the absolute main force of exports, and new energy vehicles are the biggest highlight, which will be exported to developed countries such as Norway, Belgium, and Germany.

In the view of Cui Dongshu, Secretary-General of the Passenger Association, since 2021, the strong resilience of China's auto industry chain has been fully reflected, and China's auto export market has performed super growth in the past two years. "The main driving force in 2023 is still the improvement of China's product competitiveness and the breakthrough of the European and American markets, especially the huge export increase brought about by the improvement of China's new energy export competitiveness, coupled with the fact that Russia contributed nearly 800,000 units, so the number and average price of China's automobile exports have grown strongly. It should be safe to exceed 5.2 million units under normal circumstances throughout the year. ”

Thanks to the development of overseas business, some car companies will achieve a counterattack in sales in 2023. On January 3, the latest sales data released by SAIC Motor showed that overseas sales in 2023 will be about 1.208 million units, a year-on-year increase of 18.8%, accounting for 24% of the group's sales (about 5.02 million units), Chery Automobile's overseas market sales will be 937,100 units, a year-on-year increase of 101.1%, accounting for 49.8% of the group's sales (about 1.8813 million units), and BYD's overseas sales will exceed 240,000 units, a year-on-year increase of 334.2%.

In addition to the encouraging sales growth, Chinese new energy vehicle brands are showing competitiveness in the global market. The price of BYD seals in Europe is 350,000~400,000 yuan, nearly double the starting price of less than 200,000 yuan in the domestic version; the starting price of the Volkswagen ID.3 model once dropped to below 120,000 yuan, but the price abroad is more than 300,000 yuan; the domestic price of less than 100,000 yuan Nezha AYA series foreign prices are as high as 150,000 yuan; the recently launched Chery Star Era ES as the first new energy model of Chery's high-end brand Xingtu, the price is 225,800 to 339,800 yuan, Yin Tongyue, chairman of Chery Holdings, said that the Star Era ES will be exported overseas, and the export price may exceed 1 million yuan, becoming the model with the highest export unit price in China.

BYD insiders said in an interview with the 21st Century Business Herald reporter that BYD passenger car premium overseas, related to BYD's popularity overseas, before BYD pure electric bus in overseas first, the earliest pure electric bus overseas price of 700,000 US dollars, in 2015 BYD electric bus overseas price once reached 1.1 million US dollars. "In addition, the price of Chinese brand new energy vehicles overseas is generally high, in addition to tariff reasons, it is inseparable from the improvement of technology, performance and product strength of China's new energy passenger vehicles. ”

Chinese cars are facing a lot of challenges in "conquering the world".

"In the past, Chinese companies had lessons in the process of going overseas, such as the early export of pharmaceuticals and motorcycles. To learn lessons, it is necessary for automobile companies to adhere to the attitude and requirements of high-quality development, not only the high-quality product technology, but also the competition to be high-quality and sustainable, rather than a bloody development process. Zhang Junyi, managing partner of Oliver Wyman and head of the automotive and industrial products business in the Asia-Pacific region, said in an interview with the 21st Century Business Herald.

It is the dream of several generations of Chinese automakers to "conquer the world" and build an automobile power, but the road to the dream is still facing many challenges. After China's automobile export volume has become the first, the quality of exports is the focus of future development.

On the one hand, from its own point of view, the export of Chinese brand cars is still in its infancy, and has not yet formed world-class well-known automobile brands such as Toyota, Volkswagen, and Tesla, and the lack of strong brands makes it difficult for Chinese cars to get rid of the cost-effective label when they go out.

For example, in Europe, where new domestic car companies gather, the overall market share is not large, and the labor and manufacturing costs are not low, and the symbolic significance as a springboard is greater than the actual contribution.

On the other hand, based on the external market environment, consumer demand, policies and regulations, and technical thresholds in domestic and foreign markets also make automobile exports face a more complex situation. In September 2023, the European Union announced the launch of a countervailing investigation into Chinese electric vehicles, and in December 2023, the U.S. government considered raising tariffs on Chinese electric vehicles, and uncertainties such as France and Italy have restricted subsidies for Asian electric vehicles. At the same time, the fast-growing Chinese self-owned brand cars mainly rely on intelligence, large space, and cost performance to win the market, but it will take time to win the favor of users of old automobile powers.

"Compared with international giants, the overseas business of Chinese automakers is still in its 'infancy'. However, in the era of smart electric vehicles, the brand is facing remodeling, and whether Chinese car companies can form their own brand positioning and brand value to go abroad is a problem that needs to be solved, but at present, the problem of systematically underestimating the difficulty of going overseas is more serious. In an interview with the 21st Century Business Herald, Guan Mingyu, McKinsey Global Managing Partner and Head of McKinsey China's Automotive Consulting Business, said that the market once criticized overseas car companies for not adapting to China's water and soil, their products are not suitable for the Chinese market, their management efficiency is low, and they blindly copy their own marketing plans.

Guan Mingyu believes that how to develop products suitable for the local area, find local partners, and how to accelerate the localization development of brands, supply chains, and talent teams in target countries are all topics that car companies that are interested in vigorously developing overseas business need to think about, and they should make efforts in the high-quality development of going overseas.

"China's automobile exports are still in the stage of low-end products and simple trade. Liu Anmin, director and secretary of the board of directors of China Automotive Engineering Research Institute Co., Ltd., believes that the internationalization of China's automobile industry will eventually be an all-round going out of capital, technology, management, service and brand.

He made three recommendations. First, both traditional and new markets should be emphasized. We should not only pay attention to traditional markets such as Southeast Asia and Latin America, but also actively explore the markets of developed countries. Second, do a good job in policy and standard research. Industry participants should not only pay attention to the carbon tariffs, anti-dumping and other policies of relevant countries and regions, take countermeasures in advance, but also establish policies, regulations and standards for the service industry, and study and promote the rerecognition of testing standards. Third, to build an international institution, we must not only plan the establishment of an industrial service system and form an international business combination, but also work together to build an education and promotion platform for the international development of the industry, and carry out international exchanges for trade coordination.

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