Chinese car companies go overseas: where to sell? Who makes money?

来源:定焦(It:Tinjuun)作者:定焦团队

Last year, China sold a total of 30.09 million cars, of which 4.91 million were sold overseas. If you count used cars, the overseas figure is 310,000 more.

This has allowed China to overtake Japan as the largest exporter of automobiles.

In the first three months of this year, China sold another 6.72 million new cars, of which 1.32 million were exported. Compared to the same period last year, the total volume increased by 11%, while exports increased by 33%.

That's a blast. Cars produced in China are being shipped to all parts of the world, including Russia, Mexico, Belgium, Thailand, ...... In some countries, cars imported from China account for more than half of sales.

BYD, Great Wall, Chery and other car companies have formulated ambitious plans to go overseas, and BYD has even built its first ro-ro ship, which is planned to be increased to 8 in the future. Half of Chery's 1.88 million sales last year were exports. NIO and Xpeng have entered the European market, and Nezha Automobile has entered Southeast Asia.

We know that domestic car manufacturing is very volatile, Weimar is about to go bankrupt, Gaohe is already "dying", and Xiaomi, which has been rolled up from small to big, has added a fire. Jim Fa, the CEO of Ford Motor Co., Ltd., used the words "bloody reality" to describe competition in China's auto market, and he visited China last April with the company's CFO and was shocked by the ongoing price war, with the two looking at each other and saying "oh my God."

As a result, going overseas has become an important way out for Chinese car companies. According to Zeng Qinghong, chairman of Guangzhou Automobile Group, "the current market trend is to move from involution to outward volume." ”

This boom of Chinese cars going overseas will continue for a while. What makes people curious is, where are the Chinese cars that are exported in large quantities, which cars are sold well abroad, and how much room for growth is there in the future?

01

Where did the 4.91 million vehicles go to sea?

Before discussing specific car companies and brands, we must first understand that cars are the crown jewel of industrial manufacturing, and not all countries have the ability to build cars.

Foreign trade involves tariffs and trade protection, and automobiles are strategic industries, so where a country's cars can be sold and where they sell well are not only related to the quality of the product.

Based on this understanding, let's look at the flow of China's automobile exports after that.

This graph can help us build a holistic understanding, but there are many ways to break it down in the data.

Russia is in first place with 910,000 units, accounting for nearly one-fifth of China's total exports, far ahead.

As for the reason, it has to do with the Russian-Ukrainian war. After the outbreak of the war, multinational car companies ceded about 50% of the market. Some of the Russian local brands are eaten, and the rest is basically taken by Chinese car companies. Chery took nearly 120,000 vehicles, the Great Wall more than 100,000 vehicles, and then Geely and Changan. In 2023, 6 Chinese car brands will enter the top 10 in Russian sales.

Because of the war, after more than ten years, Russia has once again become the largest export market for Chinese cars.

Mexico is the second largest export market for Chinese automobiles. In Latin America, there are three countries that are important to Chinese cars – Mexico, Brazil, and Chile, with Brazil once the largest market in Latin America. But in recent years, China has exported more and more cars to Mexico, reaching 415,000 units last year, far more than Brazil.

Breaking down the data of 415,000 vehicles, we found that only more than 100,000 vehicles were actually licensed in Mexico, and the remaining more than 200,000 vehicles went to other countries in North America.

Mexico has a special geographical location, it is a neighbor of the United States, and there is a North American Free Trade Agreement between the United States, Canada and Mexico, which has eliminated tariffs on many goods, so the cost of exporting goods from Mexico to North America is very low. As a result, a large number of multinational automakers, including Chinese automakers, have set up factories in Mexico to bypass tariff barriers to export cars to the United States.

Mexico has become a transit point for Chinese cars exported to the Americas. Ford CEO Jim Farley once mentioned that "25% of all cars sold in Mexico come from China."

Therefore, the second place in this export list, the data needs to be looked at more comprehensively.

In third place is Belgium, which imported 217,000 vehicles from China in 2023, surpassing all other European countries. Belgium is not a big country, with a population of more than 11 million, and it has been occupied by BBA before, and suddenly imports so many cars from China, The reason behind it is similar to Mexico, Belgium is a transit point for Chinese cars exported to Europe.

Belgium borders Germany, France, the Netherlands and other countries, and faces the United Kingdom across the sea. The Belgian Consul General in Guangzhou, Pei Weimin, said that almost all Chinese new energy vehicles entering the European market are imported through Belgian ports.

It is also important to note that the "Chinese car" here refers to a car made in China, not necessarily a Chinese brand, such as Tesla.

The cars produced by Tesla's Shanghai factory are counted in China's export data when they are shipped from Shanghai to other countries. In 2020, the first batch of Chinese-made Model 3s were shipped from Shanghai to the port of Zeebrugge in Belgium, and then shipped to Germany, France, Italy, Switzerland and other European countries.

Tesla sold 365,000 vehicles in Europe last year, some of which came from its Berlin plant in Germany and the rest from its Shanghai plant.

Australia has been importing more and more cars from China in recent years. Australia does not have a car manufacturing industry and will not start trade protection on cars at every turn. In addition, Australia has signed a free trade agreement with China, which will exempt Chinese cars from tariffs from 2019. As a result, Chinese automakers have increased their presence in Australia.

There are also two major markets, the Middle East and Southeast Asia, which are important destinations for China's auto exports. Saudi Arabia and the United Arab Emirates, which are relatively friendly to China in terms of trade policies, are among the top 10 countries in China's automobile exports. Saudi Arabia's auto market has always been monopolized by Asian brands, and now the proportion of Chinese brands is increasing. The UAE's sovereign fund has invested in several Chinese automakers. Southeast Asia has attracted a large number of Chinese car companies, and the degree of involution is about to catch up with China.

02

Which models are the most popular?

China's exports of automobiles include both new energy and fuel vehicles, of which fuel vehicles dominate.

Of the 4.91 million vehicles exported last year, 3.707 million were gasoline vehicles and 1.203 million were new energy vehicles, with a ratio of about 3:1. In the first quarter of this year, the total export volume was 1.324 million units, and 307,000 new energy vehicles were exported.

We know that China's new energy vehicles have great advantages, and almost all new energy vehicle companies are shouting to go overseas. But in fact, in the past two years, the largest increase in the number of exports is still fuel vehicles.

This situation is determined by the distribution of countries mentioned above.

Russia and Mexico, the two countries with the largest exports of Chinese automobiles, and the fast-growing Middle East (Saudi Arabia and the United Arab Emirates) are basically buying fuel vehicles. Especially in Saudi Arabia, there are very few new energy vehicles. Combined, these four countries imported about 1.6 million fuel vehicles from China last year, accounting for more than 40% of China's total fuel vehicle exports.

To go to these countries, there is no need to compete for electrification and intelligence like the new car-making forces, as long as the mature domestic fuel vehicles are slightly modified, combined with the local market reasonable pricing, and then do a good job in after-sales service.

Cost performance is the biggest label of China's fuel vehicles.

In the Middle East, Chinese fuel vehicles are known for being cheap. The best-selling SAIC MG5 has a starting price of less than 100,000 yuan, which is much lower than models in other countries in the same class. The price of other best-selling Chinese cars is basically around 100,000 yuan.

Chile's largest sales segment is mid-size pickup trucks, and China's SAIC Maxus T60 is very popular there, with a starting price of less than 160,000 yuan, compared to more than 200,000 yuan for Japanese cars in the same class.

Several of the favorite Chinese cars of Russians - Haval First Love, Tiggo 7, Geely Boyue Pro, are all economical models. The best-selling Chinese cars in Mexico, the SAIC MG 5, Chery Omoda, and Tiggo 4, are also not expensive.

On the whole, China's fuel vehicles are mainly sold overseas, and they are competing for the market with Japanese and Korean cars, and the market is concentrated in Russia, Latin America, the Middle East and other countries and regions. In Southeast Asia, where Japanese cars dominate, and in Europe, where German cars dominate, there are not many opportunities for Chinese fuel vehicles.

However, the market that fuel vehicles cannot enter is an opportunity for China's new energy vehicles. In the past year, the best sales of new energy vehicles in China have been in Europe and Southeast Asia. Among them, the United Kingdom, Spain, the Philippines and Thailand are among the top 10 countries in China's automobile exports.

New energy vehicles are an incremental market, and there are opportunities for overtaking in corners. The Chinese market has undergone brutal involution, and the brands that survive and can go overseas generally have a strong competitive advantage abroad. However, at the current stage, China's new energy vehicles also rely on cost performance overseas.

For example, in Germany, SAIC MG4 sells for 180,000 yuan, which is 60,000 yuan more expensive than in China, but it is still more than 100,000 yuan cheaper than the Volkswagen ID.3, which is similar to MG4 positioning and manufactured in Germany. Previously, SAIC Volkswagen lowered the price of the domestically produced ID.3 in China, which also caused dissatisfaction among German consumers, because the German production sold for more than 300,000 yuan, and the Chinese production only sold for more than 100,000 yuan.

As soon as the prices of the two sides are compared, the advantages of China's electric vehicle exports are reflected at once. As a result, a German dealer imported Volkswagen brand electric vehicles from China and wanted to make the difference between the two sides, and was sued by the German Volkswagen.

Low production cost is one of the biggest advantages of China's electric vehicles going overseas. The same model, produced in China, is still not expensive after export, even if tariffs and transportation costs are added. The European Parliament said in a briefing that the price of electric vehicles in China is 20% lower than similar products in the EU.

This has led to a phenomenon in which some multinational car companies cannot sell the cars produced in China locally, so they sell them overseas and export them from China.

For example, Ford Motor adjusted its strategy in the Chinese market last year, and plans to make Ford China an "export center" for Ford Motor. It is no longer involved with Chinese car companies, but is produced and exported in China. The aforementioned CEO of Ford Motor Co., Ltd., who is afraid of a price war, believes that "China is very important as an export base, and it is very profitable to export gasoline vehicles and electric vehicles from China." ”

Against this backdrop, some of China's auto exports are contributed by foreign automakers such as Tesla and Ford. Excluding this part of sales, the remaining cars produced by China's own brands can better represent the influence of Chinese brands.

03

The strength of car companies to go overseas is a big competition

So, which Chinese brands of cars are really selling well abroad?

Let's first look at this chart from the statistics of the China Automobile Association:

SAIC and Chery can be called the twin heroes of Chinese automobiles going overseas, far ahead of other car companies. After excluding Tesla, the top three independent (Geely, Great Wall, BYD) sold well, and Changan has always been the dominant player.

SAIC Motor ranked first last year with 1.208 million units sold overseas (1.099 million units exported, 109,000 units produced locally). Of these 1.208 million units, more than half were contributed by the MG brand, with 675,000 units.

The MG brand is very popular overseas, especially in Europe, and can rank among the top three in the pure electric market in the United Kingdom and Spain. Last year, the MG brand sold 107,000 units in the UK, while China exported 214,000 cars to the UK. Britain can rank the fifth largest country in China's car exports, relying on the MG brand. In addition, in Thailand, India, Brazil and other markets, the MG brand is also selling well.

However, it should be noted that MG is not a native Chinese brand, it was acquired by SAIC from the United Kingdom, and later launched two brand series products: Roewe and MG. The MG brand originally had a certain influence in Europe, and sales resumed in Europe in 2019.

In addition to the MG brand, SAIC's most popular overseas brand is SAIC-GM-Wuling, which sold 376,000 units last year. Wuling mainly sells to Southeast Asia, South America, Africa and other markets, focusing on cost performance, and its market share in Indonesia is second only to Toyota and Honda.

Chery's overseas performance has been outstanding in the past two years, doubling to more than 900,000 units in 2023, and exports have accounted for half of Chery's total sales. From the perspective of a single brand, Chery ranks first in the export of China's own brands.

In the past few years, there have been many voices of Chery in China, and its domestic sales and new energy transformation have begun to lag behind significantly, and who knows that it has quietly opened up the situation overseas.

Chery mainly sells fuel vehicles overseas, and the Tiggo series is the main export model, focusing on "large volume and affordability". Its main export destinations are Russia, Latin America, the Middle East and other regions. Chery's outbreak is also benefiting from the growth of sales in these markets.

Chery's growth momentum continues. In the first quarter of this year, Chery exported 253,000 units, surpassing SAIC in the first place.

Geely and Great Wall, the size of the company is about the same, and there is not much difference in overseas sales.

Geely is mainly deeply engaged in emerging markets such as ASEAN, the Middle East and Africa, and has deployed in Europe and Southeast Asia through the acquisition of Volvo and Proton Motors, and its pure electric brand Zeekr is entering Europe, the Middle East and other places.

After the Great Wall released its "Ecological Going to Sea" strategy in 2022, its overseas expansion has accelerated significantly, and all its five major brands have achieved overseas expansion. According to the data released by the Great Wall, it has entered more than 170 countries and regions around the world. In the first quarter of this year, Great Wall's overseas sales accounted for one-third.

It is relatively easy for Chinese car companies to make money overseas, unlike losing money at home. For example, the gross profit margin of the Great Wall business was 15.5% in China last year and 26% in foreign countries. Perhaps, the profits of car companies in China are all involved in each other.

Let's focus on new energy. BYD and Tesla are the main exporters of new energy vehicles in China.

BYD sells only NEVs and Tesla sells only pure electric vehicles, and they exported 252,000 and 344,000 units, respectively, from China last year, accounting for half of the total NEV exports. All the remaining car companies, including new car-making forces such as "Wei Xiaoli", exported a total of 607,000 units.

Among them, in addition to SAIC's more than 200,000 vehicles, Geely and Great Wall will divide some more, leaving little share for other car companies. The proportion of new forces such as "Wei Xiaoli" is very small.

The new energy transformation in many overseas countries has a gradual transition process like that in China, and those traditional car companies who have enjoyed market dividends in the early stage are still those who have enjoyed the market dividends. NIO went to Europe, with a lot of momentum, and built a lot of showrooms, but not many cars were sold; Combined, the two companies sold several thousand units overseas last year.

Among the new forces, only Nezha performed well, selling 16,000 units overseas last year. In Thailand, Nezha's electric vehicle sales are second only to BYD.

However, the new forces currently have low overseas sales, not because the products are not too hard, but because the production capacity, channels, and after-sales system have not yet been built. They have just gained a foothold in the country, and it will take some time to go to sea. At least in terms of intelligence, they have almost no opponents when they go to sea.

One example is that Ideal does not currently have overseas markets, but there are car dealers who secretly export Ideal cars to Central Asia and the Middle East. Russia's wealthy businessmen and tyrants in the Middle East favor the ideal L9. In July last year, more than 200 ideal cars were exported in parallel.

As BYD makes every effort to promote its overseas business, it cannot be ruled out that in the future, China's new energy will go overseas like China, showing a situation in which BYD is dominant.

In the first quarter of this year, BYD exported 99,000 vehicles, an increase of 1.3 times, while China's total new energy exports in the same period were 307,000 units, and BYD contributed nearly one-third, surpassing Tesla. Chinese car companies can't beat BYD at home, and they have to face BYD's artillery fire when they go overseas.

04

epilogue

Looking at the world, there is no country with such a volatile car market as China. With the acceleration of Chinese cars going overseas, overseas has also begun to roll, and there are signs of price wars.

An executive of a domestic independent brand said that in just over a year, the Russian market has now evolved into a "red sea", with many Chinese car companies fighting, and the competition is as fierce as that of China.

The situation is similar in Southeast Asia and Latin America. In Thailand, after BYD, Nezha, and Great Wall opened the market, Aion, Changan, and Xiaopeng followed closely to enter the market; in Mexico, SAIC and JAC entered the market earlier, and after BYD and Great Wall started selling new energy vehicles locally last year, Nezha also announced that it would launch flagship models; in the United Arab Emirates, BYD and ZEEKR have entered the market last year, and there are a number of new Chinese car-making forces.

called back and forth, and in the end, the Chinese car companies just changed places. Especially for new energy vehicles, there are not many countries that are relatively open, have policy support, and have low tariff barriers, resulting in the phenomenon of Chinese car companies going overseas. If you want to develop in the long run, you still have to compete benignly, in addition to vigorously selling cars, products, services, and after-sales all aspects must be in place.

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