Why is it so difficult for Chinese cars to enter the United States? Do American consumers want Chinese cars?

In 2023, China's domestic passenger car sales will be 21.923 million units, up 4.2% year-on-year, while the United States will sell 15.588 million new vehicles in 2023, up 12.3% year-on-year.

In absolute terms, China has been the world's largest market since 2009, and the United States has begun to become the second largest market, but from the perspective of "market fatness", that is, profits, the American market is the favorite of car companies, after all, making money is the last word.

First of all, the U.S. market is large enough, with the U.S. car market in 2023 being about 71% of China's, and the average selling price of a new car in the U.S. is much higher than in China when taxes and fees are not high.

According to statistics, the average price of new cars in China in the first three quarters of 2023 is 175,000 yuan, and according to data from Cox Automotive, the average price of new cars in the United States in mid-2023 is 48,000 US dollars (equivalent to about 342,000 yuan), while in 2016 this figure is still 34,000 US dollars, an increase of about 50%, and now there is only one model in the US auto market that is priced below 20,000 US dollars (equivalent to about 142,000 yuan).

Taking the best-selling non-pickup truck model in the United States, the Toyota RAV4, as an example, 430,000 units will be sold in the United States in 2023, with a price of 28,475-47,560 US dollars, equivalent to 20.3-339,000 yuan, while the domestic Toyota Rongfang's guide price is 176,800-263,800 yuan.

According to CNBC reports, 31% of new cars will have a price increase at the beginning of 2023, of which the first price increase is the Genesis GV70, with an average guide price of $44,299, but the actual average transaction price reached $56,476, a price increase of up to 28%, in addition to the JEEP Wrangler, Mercedes-Benz GLB, and Porsche Taycan also have price increases of 24%, 23%, and 23% respectively.

We know that although the "price increase" is ostensibly collected by dealers, in fact, car companies are also a big beneficiary, which can increase the shipping price and maximize profits by bundling and other operations.

As a result, we can see that the "Big Three" of America, namely Ford, General Motors, and Stellantis, which are losing ground in China and Europe, are all making a lot of money in 2023: Ford's net profit in 2023 reached 4.33 billion US dollars, equivalent to about 31.1 billion yuan, GM's net profit reached 11 billion US dollars, equivalent to about 72.3 billion yuan, and Stellantis's net profit reached 18.6 billion euros, equivalent to 142.7 billion yuan.

On the other hand, in the Chinese market, the price war will be fought for a whole year in 2023, with 120,000 Citroen C6, 88,800 yuan Wuling Xingguang PHEV, and more than 140,000 Accord constantly refreshing the bottom line of new car prices.

The American people want Chinese cars

As mentioned above, the U.S. market is a huge piece of cheese for car companies, but it is a disaster for the American people.

On the one hand, Chinese cars are really cheap, the latest news, BYD will recently launch the 79,800 yuan Qin PLUS DM-i Glory Edition, while the price of the American Corolla Shuangqing starts at 23,500 US dollars, the price is more than 2 times that of the Qin PLUS DM-i, and it cannot be plugged in. Imagine that at this time, you are about to buy an A-class sedan in the United States, will you drool when you see the domestic BYD Qin PLUS DM-i and Wuling Xingguang PHEV?

In addition, if you want to buy new energy vehicles in the United States, only Tesla is basically more reliable, and Tesla alone will account for most of the electric vehicles in the United States in 2023. In China, there are BYD, Wei Xiaoli, Extreme Krypton, Leap, Zhiji and other immortals fighting, Tesla is just one of the options, obviously consumers in China are happier.

You must know that the current oil price in the United States is not cheap, for example, the oil price in Los Angeles is 1.41 US dollars a liter, which is equivalent to 10.8 yuan a liter, which is more expensive than in China, "the price of oil in the United States is cheap" is already a long time ago, so Toyota THS and Honda i-MMD hybrid models are very popular, and many models of Hyundai Kia and GM also have hybrid options.

At the same time, most people's houses in the United States have their own yards, and it is very easy to install a charging pile, and it can also be combined with photovoltaic panels to achieve "zero-yuan charging".

And the country has now begun to roll up "intelligent", high-speed/urban NOA, in-car voice assistant, refrigerator color TV sofa is becoming more and more popular, while American cars are still at the level of partial "tool" attributes, and intelligence is not at the same level at all.

It can be said that whether it is price or product power, "Chinese cars" can kill "American cars" in seconds, and for American consumers, they dream of buying domestic cars.

The Australian market can also be used here to prove that the Australian car market is very similar to the United States, the best-selling cars are pickup trucks, and then Japanese cars are also very popular, but in recent years, independent brand cars have also been sold more and more, such as the MG brand sold 58,000 new cars in Australia in 2023, BYD sold 12,000 units, and cars from China have reached 193,000, accounting for 15.9% of the overall market, and this proportion will increase rapidly in the future.

n means by which the United States restricts the entry of Chinese cars

While the American people need Chinese cars, the U.S. government doesn't think so.

At present, it is difficult for Chinese cars to enter the United States, which can be summarized as follows:

1. Tariffs, under normal circumstances, the tariff on imported cars in the U.S. market is 2.5%, but Chinese cars entering the U.S. will be subject to an additional 25% special tariff, which is a 27.5% tariff. And it's only 10% in Europe at the moment.

2. Unable to receive the subsidy, the Inflation Reduction Act, referred to as the IRA, has a $7,500 subsidy for electric vehicles, but in order to receive this subsidy, the conditions are very harsh, not only the assembly and production of vehicles must be in the United States, but also a considerable proportion of core components such as batteries must be produced in the United States.

3. Import qualification certification, if the vehicle wants to enter the United States, it is impossible without the certification of the National Highway Traffic Safety Administration (NHTSA), and there is no domestic car to obtain this certification, or not to apply at all.

4. The potential risk of "shutting down the door and beating the dog", the above 3 points are only the risks on the surface, in fact, the reefs below the sea are more dangerous, and the vehicle may face astronomical fines if there is only a small problem, and any investment in the United States may sink into the sea, for example, CATL was originally ready to build a factory in the United States with Ford, but after thinking twice, the risk was too great and was shelved.

In addition, the United States is still trying its best to "patch and plug loopholes", according to the Global Times, citing overseas media reports, people familiar with the matter said that the United States is considering using methods other than tariffs to restrict the import of China's "smart cars" and related components. Regardless of where these products end up being assembled, the U.S. will impose restrictions to prevent Chinese manufacturers from shipping cars and parts to the U.S. market through third countries such as Mexico.

Generally speaking, the current U.S. auto market is the most eye-catching market in the world, with large volume and high profits, but it is not a good thing for American consumers, who have to continue to increase prices to buy American and Japanese cars that are not cheap, while high-quality and low-cost Chinese cars are blocked from entering.

Although this has protected part of the U.S. auto industry to a certain extent, the "flower in the greenhouse" will not be able to stand on its own, and if it cannot compete head-on with the Chinese auto industry, it will eventually lose the rest of the global market.

Finally, I would like to shout to the U.S. government on behalf of American consumers: please open the door and trade freely.