2024-02-25 21:00:00
This week the Chinese delicately showed Europe that they are there. Car manufacturer BYD sailed into the port of Vlissingen on Wednesday with its own ship, dropped off some of the seven thousand electric cars and then steamed to Bremerhaven, to do the same trick to the Germans.
The fact that China now has by far the largest muscles in the automotive world is evident from figures from the American credit rating agency Moody’s. China not only produces a lot for its own country, Chinese car exports increased by about 58 percent in 2023. Car sales increased by more than 10 percent last year in the three most important markets in the world.
In China, sales of new passenger cars increased by 11 percent, in the US by 12.4 percent and in Europe even by 13.7 percent. Good news for the car manufacturers, you might say. The result of a recovery after the global pandemic.
Above average profitability
But looking ahead, things look less rosy for the industry, notes major bank ING: “After three years of low production and sales, the market picked up strongly. But that catch-up is now coming to an end,” says Rico Luman, sector economist automotive at ING. “We expect car manufacturers’ profit margins to come under some pressure this year, after a period of above-average profitability in the immediate post-corona period.”
Although the bank expects that the ‘positive sales momentum’ will continue for a while in 2024, but at a much slower pace. ING predicts global car sales growth of 2.6 percent in 2024.
The fact that the greatest growth has now stopped is due to less favorable economic prospects and low consumer confidence in the three most important regions for the car market. In addition, interest rates remain high and second-hand car prices have fallen. Luman: “Because the new prices of electric cars in particular have fallen, used electric cars have also become cheaper. They can appeal to a new target group.”
Regional supply chains
If ING adds up all types of electric cars (including hybrids), 17 percent of newly sold vehicles worldwide now have a plug. However, the popularity of plug-in cars varies greatly per region. China is the leader. Sustained fiscal support, abundant manufacturing capacity and well-developed regional supply chains helped China’s sales of new electric cars reach nine million last year. The country has the largest manufacturer of fully electric cars, the aforementioned Build Your Dreams (BYD).
European (and American) manufacturers have been seriously concerned about the Chinese show of power for some time, especially because Chinese brands are more successful in keeping the price of new plug-in cars low. The EU has started an investigation into whether there is Chinese state aid. If so, this could lead to additional duties on Chinese cars entering Europe. The outcome of the investigation is not expected before the end of the year.
The number of charging points is lagging behind
Western car manufacturers and governments have their hands full with their own problems for the time being. Subsidies to encourage the purchase of new and used electric cars have been, or are being, rolled back in major automotive countries such as Germany, France and the United Kingdom. Italy is expected to receive a subsidy scheme this year. Another problem in Europe is that the number of charging points lags behind the number of people who have an electric car.
Also read:
Will 2024 be the year of affordable electric driving? Second-hand leasing ‘could become the breakthrough for the masses’
Second-hand electric cars will become accessible to more people this year, especially in the used car leasing market. ‘That could well be the breakthrough for the masses.’
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