There are many metropolises in China and the two agglomerations of millions in particular, Shanghai and Beijing, are the gateways to the western world. Before the pandemic, vehicles from Europe dominated the gigantic ring roads here, but the picture is now often very different. Because a model like the Mercedes C or E-Class with a long China wheelbase has been pushed back just like the comparable models from Audi (A4 L / A6 L), BMW (3 Series L / 5 Series L) or competitors from General Motors, Volkswagen, Peugeot or Toyota. The situation is similar with SUVs, because here, too, European crossovers, especially from the once popular middle class, are less common than the local competition.
Although models such as the BMW X1, Audi Q3, Mercedes GLA and VW Tiguan are also produced in China, the vehicles that clog the freeways day after day in the two Western-oriented metropolises of Shanghai and Beijing are now not only made locally , but also have illuminated signets from BYD, SAIC, Roewe, HiPhi, MG or Geely on the rear. The SUVs in particular are becoming more and more popular and have long been making life difficult for the classic sedans that were once so popular. But that’s not all, because the increasingly younger vehicles with the green license plate also signal that they are NEV – New Energy Vehicles – and therefore electrified vehicles. In all cases, the models are completely electric and the hybrids are becoming rarer here too.
The registration statistics also confirm this subjective impression. The fact that the growth has been impressive in many of the past few months is not least due to the sometimes still tough lockdown restrictions that China imposed on itself in spring 2022. These had kept the new car market down and so it is not surprising that new car registrations have mostly recorded impressive growth in recent months. The electric models in particular, but not only, benefited from this. But depending on the month, there was sometimes growth of well over 50 percent compared to the previous year. Around a third of the vehicles were new on the roads of China in the spring months as BEVs – battery electric vehicles. The fact that June saw a slight decline shouldn’t make the international automakers nervous any more than the home players, because compared to May 2023 there was still an increase of almost ten percent. However, in June of the previous year, more vehicles were sold again for the first time with a pushed back pandemic and order backlogs were thus processed.
But even if electric vehicles are increasingly taking over the registration statistics, China is far from relying solely on electric models. This can be clearly seen on the streets on a tour of other megacities such as Hangzhou, Shenzhen or Wuhan. Here, too, there are now more local brands and fewer models from Volkswagen and the European premium manufacturers. Unlike Shanghai or Beijing, the proportion of purely electric models, which is now around one third of the overall market, is significantly lower. This is less due to the smaller international influences, but often also to local subsidies, because the individual administrative districts often support the purchase of an electric car quite differently. But regardless of whether it’s an electric car, plug-in hybrid or a normal combustion engine with a petrol engine – the Chinese car manufacturers have become much more self-confident during the pandemic when it comes to their own brands and especially their own models. They are not only more competitive than ever across all segments, but depending on the brand in question, they often have the advantage of not having to deal with the old world of combustion engines. That makes it easier for platforms and drives, because the international suppliers have long since adapted to this. The price pressure in China remains enormous. Almost all foreign brands have had to adjust their prices downwards in recent months because the domestic brands have set new framework conditions. Best examples: Tesla, Mercedes and BMW.
In addition to the changed self-image of the Chinese brands, there is another noteworthy advantage: corporations such as Build Your Dreams, SAIC, Geely or FAW produce the vehicles much cheaper than the competition – especially from Europe. Here the advantages for a vehicle in the 50,000-euro class are easily around 10,000 euros – a contribution margin that many in the league of a mid-range SUV or a sedan with or without an electric drive do not even generate. This, in turn, not only has a major impact on the Chinese market, but also has an indirect effect in Europe, because more and more Chinese manufacturers are now exporting vehicles from China all over the world. Due to the significantly lower production costs, you can still make good money with small quantities despite customs imports and increase the quantities at the same time. One thing has hardly changed over the decades: many manufacturers – especially from China – want to be represented at almost any price on the European market, which is so rich in image. The recent market entries of manufacturers such as Nio, BYD, Human Horizons, Zeekr and Lotus have never made this clearer than it is now.
