China's auto exports are "encircled and blocked"?

China News Weekly

2024-05-24 19:27Published on the official account of China News Weekly in Beijing

Recently, the United States announced tariffs on a range of goods such as Chinese solar cells, electric vehicles, computer chips and medical products. Among them, the tariff on electric vehicles will be increased from 25% to 100% (from 27.5% to 102.5% after the additional tariff), the tariff on power batteries will be increased from 7.5% to 25%, and the tariff on battery parts will be increased from 7.5% to 25%.

Coincidentally, on May 8, local time, EU President Ursula von der Leyen said in an interview in Berlin, Germany, that Europe must prevent Chinese electric vehicles that are "heavily subsidized" from entering the European market.

Behind the "encirclement and interception" of China's electric vehicles by Europe and the United States is the development status quo of China's automobile exports. In 2023, mainland exported 4.91 million vehicles, up 57.9% year-on-year, ranking first in the world for the first time.

This momentum continues. According to the latest statistics released by the General Administration of Customs, in April 2024, China's vehicle exports reached 556,000 units, and the export value exceeded the $10 billion mark for the first time, reaching $10.7 billion, both hitting a monthly record high.

"The increase in U.S. tariffs has no impact on Great Wall Motors." Shi Qingke, vice president and head of overseas business of Great Wall Motors, told China News Weekly. Since the U.S. is not currently a major market for Chinese auto exports, the actual impact of the U.S. on raising the tariff threshold for Chinese electric vehicles is not significant. According to the data, the current export of new energy vehicles in the US market to China accounts for less than 1%.

As for the EU's "enthusiasm for protection", European car giants are also "unwilling to buy it". BMW CEO Philip Zipzer recently said that the EU's imposition of tariffs on Chinese electric vehicles is "shooting itself in the foot". He bluntly said that the European automotive industry "does not need protection".

Who bought the Chinese car?

In 2023, Russia will become the largest export destination for Chinese automobiles, with China's vehicle exports to Russia exceeding 900,000 units, a year-on-year increase of 459%.

After the outbreak of the Russia-Ukraine conflict, American, European, Japanese and South Korean car companies have withdrawn from the Russian market, providing rare opportunities for Chinese car companies. Sales of Chinese brands such as Great Wall, Chery and Geely have steadily increased in the Russian market.

This was followed by Mexico with 415,100 units, up 62% y/y and accounting for 8.5% of total exports.

Reuters has previously reported that there is a view in the U.S. political arena that Chinese electric vehicle manufacturers have the possibility of opening the U.S. market by building factories in Mexico first, so it is recommended to impose tariffs to completely exclude electric vehicles, batteries and other components and resources produced by Chinese companies from the supply chain.

According to the North American Free Trade Agreement (NAFTA), as long as more than 62.5% of a vehicle's parts are produced in North America, it can enter the U.S. market duty-free. Tesla has announced the construction of a factory in Mexico, with a planned annual production capacity of 2 million vehicles. BYD, SAIC, Chery and other car companies are actively negotiating with the Mexican government to build factories, and a number of Chinese supply chain companies have also begun to build factories in Mexico. The U.S., on the other hand, is highly wary of the possibility of Chinese brand cars entering its market through Mexico.

In addition, among the main export destinations of Chinese automobiles in 2023, Belgium, Australia, the United Kingdom, and Saudi Arabia are all about 210,000 units; Thailand and the Philippines each have 170,000 units, the United Arab Emirates and Uzbekistan have 150,000 and 110,000 units, respectively.

At present, the market share of Chinese automobiles in Europe continues to grow. In March this year, Chinese automakers' share of the European market exceeded 4% for the first time, with a total of 57,400 vehicles, up 6.6% year-on-year, according to Dataforce, a German market research firm.

Image source: Great Wall Motors

"There is a big difference between this round of overall Chinese cars going overseas and the market situation they faced ten years ago." Mu Feng, president of Great Wall Motors, told China News Weekly, "In the past, going overseas was an opportunistic market, but now it is a strategic market, and China is the origin market of this round of change." ”

Mu Feng said that the Chinese market has both consumption desire and consumption capacity for electrification and intelligence. According to Mu Feng, the age of new car users in North America, Europe, Japan and South Korea is significantly greater than that of China, "the average age in North America should be 51 years old and have purchasing power, but the consumption desire in the Internet era is not as good as that of young users."

According to Shi Qingke, the main export destinations of Great Wall Motors are Eurasia, Latin America and Australia, "because many countries do not have the infrastructure for the promotion of pure electric vehicles, export models are still dominated by fuel vehicles, and HEV models have also increased significantly."

Image source: Yutong

At the same time, new energy commercial vehicles produced in China have entered more markets around the world and achieved a breakthrough in high-end. Yutong Group told China News Weekly that recently, 46 airport shuttle buses of Yutong have been delivered to Spain in batches and will be put into operation at 15 airports in the country. Among them, 25 pure electric airport shuttle buses have set a record for the largest batch of new energy airport shuttle bus orders exported by China. It is understood that Yutong airport shuttle bus products have covered more than 30 overseas countries and regions in Europe, the Middle East, Central Asia, Africa, South America and achieved continuous operation, of which the comprehensive ownership of the European airport shuttle bus market has exceeded 100, is the highest number of Chinese brands in Europe.

The exit is behind the first summit

In the process of exporting overseas, Chinese auto brands have not only achieved a rise in volume, but also achieved a breakthrough in brand influence.

Image source: Chery Automobile

Chery Automobile, for example, exported 937,000 vehicles last year, accounting for nearly half of total sales, but contributing more than half of its profits.

In overseas markets, Chery is also constantly promoting the high-end brand. The positioning of Xingtu products in overseas markets is directly benchmarked against luxury brands such as Mercedes-Benz, BMW, Audi and Lexus. "Whether it is the domestic market or the international market, Chery began to try to improve the brand at a very early stage." Not long ago, after the launch conference of Chery Xingtu Star Epoch ET, Yin Tongyue, Secretary of the Party Committee and Chairman of Chery Holding Group, told China News Weekly: "We have always hoped for high-quality development, including the development of overseas markets, product sales structure, quality and reputation, which we are extremely concerned about. As for selling thousands more and selling fewer thousands of units a month, we don't pay much attention to it, and now we must pay attention to the actual sales, otherwise the dealers will be messed up, and users will also be affected. ”

Great Wall Motor's exports have also achieved strong growth, and its net profit performance is particularly impressive, thanks to the efforts of high-end brands. According to the first-quarter financial report, Great Wall Motor's operating income in the first quarter was 42.86 billion yuan, a year-on-year increase of 47.60%, and its net profit was 3.228 billion yuan, a year-on-year increase of 1752.55%. In terms of sales, the cumulative sales in the first quarter were 275,000 units, a year-on-year increase of 25%. Among them, overseas sales were 92,800 units, a year-on-year increase of 78.51%, accounting for 33.75%; The sales volume of new energy vehicles was 59,200, a year-on-year increase of 112.82%, accounting for 21.53%.

For the development of overseas markets, Mu Feng said that China's automobile going overseas is changing from "trade-based going to sea" to "ecological going to sea". "If we want to be truly local consumers, we have to put service first. We call it an ecological outing, a strategic outing. ”

"When it first entered the European market, Yutong combined with the actual needs and suggestions of Spanish customers to make nearly 60 improvements and optimizations to the key technologies of the whole vehicle." According to Yutong, before 2007, the airport shuttle bus products in the mainland civil aviation market were completely dependent on imports; However, in recent years, the market share of domestic airport shuttle buses has gradually surpassed that of imported products, and has become the absolute main force of domestic "trunk airports". "Yutong has a market share of more than 65% in the domestic pure electric airport shuttle industry, not only becoming the first brand in domestic airport shuttle sales, but also the first brand in the world's pure electric airport shuttle sales, of which the proportion of pure electric vehicle sales is increasing year by year, continuously promoting the green transformation and sustainable development of global airports." Yutong said.

At the same time, "origin and sales" is also an unavoidable topic for Chinese cars to go overseas. "We must not only create value for Chinese automobiles, but also create social value for the local government and local consumers, so that it is a sustainable and sustainable process." Mu Feng said.

At present, Chinese auto companies are building factories overseas. BYD has built Europe's first new energy vehicle factory in Hungary, with an investment of billions of euros to produce electric vehicles and power batteries. GAC Group has accelerated the construction of overseas factories in Myanmar, Malaysia, Thailand and other places, among which GAC Aion's Thailand plant took only four months from application to approval, making it the fastest bonded factory in Thailand's electric vehicle industry.

Author: Liu Shanshan

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