2023-08-08 04:56:00
A car factory in Germany (Archyde.com)
cars
The Chinese auto industry is the world’s largest exporter, market and producer
Dubai – Al Arabiya.net
Posted on: August 08, 2023: 08:56 AM GST Last updated: August 08, 2023: 09:05 AM GST
A sense of crisis is spreading in the German economy as order books appear narrower and consumers’ purchasing power dwindles amid rising inflation.
The country’s automakers also face headwinds, but their structural problems in the industry are exacerbated by the transition to electric mobility and autonomous driving in rising costs, while the necessary funds, which still come mostly from sales of combustion engine cars, are increasingly uncertain. Not to mention being politically unpopular.
Corporate figures for the first half of 2023 were satisfactory for companies such as; Volkswagen, Mercedes-Benz and BMW. All of them reported increased revenue and higher profits. But their outlook for the rest of the year disappointed the expectations of investors and shareholders. Inflation and higher interest rates have a dampening effect, and there is less demand for new cars.
For his part, the head of the German Association of the Automotive Industry, Hildegard Mueller, warned: “Even if we witness an increase in production, this is not a sign of the end of the problem,” noting that sales are still below the levels of the five years prior to the epidemic in 2019, according to It was reported by “DW” and viewed by “Al Arabiya.net”.
Orders fell in Germany, particularly for battery-powered cars, with demand down to only regarding 60% of volumes from the previous year.
China’s booming market
Meanwhile, China, the world’s largest and most important auto market, is rapidly developing its electric vehicle sector, consolidating its leadership not only in new registrations, but also in production.
Chinese manufacturers are also making rapid technological progress that might put them ahead of Tesla. Chinese car buyers, both middle-class and high-income, increasingly prefer local brands.
BYD, China’s largest automaker, sold 29% more pure electric cars than Tesla in the first half of this year, according to the latest figures from the China Passenger Car Association.
“There is turbulence in this market,” Ralf Brandstatter, a member of Volkswagen China’s board of directors, recently told reporters, as he was forced to admit that BYD sold significantly more Volkswagen in the first quarter in China. BYD has delivered nearly 20 times more electric vehicles to customers in China than Volkswagen.
In order to catch up with the rising wave of auto power in China, Volkswagen has announced a partnership with automaker Xpeng in the areas of electric mobility, software and autonomous driving. The partnership with the Chinese startup costs Volkswagen $700 million and aims to bring two electric Volkswagen models to the Chinese market by 2026.
luxury car sector
Luxury brands such as Volkswagen, Porsche and Audi are also feeling increasing pressure in the market, as are Germany’s two other luxury automakers, Mercedes-Benz and BMW.
Automotive industry consulting company “Berylls” said in a recent market study that the world is witnessing a “change in favor of China” in the luxury car sector. In competition with traditional luxury manufacturers from Germany, the Chinese are “rapidly overtaking,” the study said.
For decades, German automakers dominated the Chinese market using a piecemeal strategy: “They introduced the technology they developed as optional extras for consumers and kept selling it at a premium price, until their competitors caught up.”
“How outdated is this product strategy with the expectations of Chinese car buyers today,” said Willy Wang, Managing Director of Berylls. “German car manufacturers are catching the bait at first, and the repercussions are alarming for the future.”
“As China moves to the forefront of consumer innovation, Chinese customers have neither the patience for technologies seeping down the line nor the willingness to pay more for the latest features,” Wang wrote.
In the past, German luxury cars were considered ideal status symbols for China’s rising middle and upper classes. Domestic brands have a reputation of being technologically backward and of little convincing quality.
Digital features are the trump card
But cars produced in China are now gaining popularity, especially because of digital features such as advanced assistance and infotainment systems. This is not surprising given the traffic situation on China’s busy roads. In terms of things like comfort and quality, customers perceive them as roughly the same or even slightly better than established automakers, according to the study.
“It is likely that the German auto industry will not play the same dominant role in China’s auto sector as it has in the past 20 years,” said Gregor Sebastian, a China expert from Merics Institute.
There is no German manufacturer in the top ten
No wonder 80% of all battery electric vehicles in China now come from domestic producers. And among the top ten sellers, there is only Tesla. German brands no longer play any role in the list.
In China’s total auto market, including those with internal combustion engines, Chinese brands are set to outpace foreign brands this year for the first time, with a market share of 51 percent. That share is expected to rise to 65% by 2030, management consultants AlixPartners says in its 2023 Global Auto Outlook.
China is the export champion
With regard to Europe, the report expects car sales to remain regarding 15% below pre-pandemic levels. This was likely a long-term possibility. European manufacturers will also come under increasing pressure from Chinese electric vehicle manufacturers in their home markets.
Unsurprisingly, in the first quarter of 2023, China has replaced Japan as the world’s first auto exporter. And in 2020, it was still in sixth place. Thus, China has achieved the first place in sales, export and as a production site.
Read also
1691473521
#Chinese #manufacturers #outperform #German #car #companies. #happened
