China is now the biggest auto exporter in the world, according to a new analysis from global consulting firm AlixPartners.
It’s a change that’s happened only recently, but one that shows the significant potential for Chinese automakers to disrupt the automotive industry in the coming years, especially in light of the accelerating electric vehicle transition.
The shift in export status, with China surpassing Japan for exports, is one of the signs that China is an up-and-coming player in the global auto industry, Stephen Dyer, AlixPartners’ Asia Leader for automotive and industrial practice, said during a webinar Monday to discuss the group’s closely watched annual global outlook report on the state of the industry. The report touched on other issues, but was largely focused on the rise of China as a global auto powerhouse, which will have significant implications for the rest of the auto industry.
“This year in the first quarter, for the first time ever, Chinese OEMs lead the ranking in terms of global exports out of China,” Dyer said, using an industry abbreviation for automakers. “This is significant.”
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Chinese automakers aren’t turning to export markets in order to survive, which is a departure from past cases like in Japan and South Korea. Instead, they’re doing it to gain experience and credibility, he said, noting that Chinese automakers still see growth opportunities at home.
The traditional auto industry in the United States and other countries has been focused largely on disruption from Tesla, but will now need to prepare for disruption from Chinese automakers in 2025 and beyond, according to the analysis.
Much of that is tied directly to EVs. China is on track to exceed 30% market penetration for electric vehicles this year, and the country last year beat its government target of 25% three years early, Dyer said.
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The groundwork for this was created in large part by investment from the Chinese government, which at $57 billion, is five times the U.S. rate, he said. That investment has funded development and given EV startups the confidence to operate in a financially challenging industry.
Another sign of the strength of China’s automotive brands is how they compare to foreign brands, with expectations that this year they’ll outsell the foreign brands in China for the first time, Dyer said, a factor influenced in part by how Chinese automakers read their customers. They deliver more advanced driver assistance content and technology features like voice recognition at all price levels, helping to set them apart.
They also manage to bring new models to market much quicker, and those more frequent model updates keep the products fresh and more desirable. They’re also less focused on vehicle handling and similar performance issues, adopting a “good enough” approach.
Chinese automakers tend to have a higher "risk profile” when it comes to introducing new models and do more product adjustments through over-the-air updates, something that has long set Tesla apart.
“They’re willing to put a vehicle on the market that may have some bugs that they can either fix later with software over-the-air updates, or the attributes are still good enough,” Dyer said, noting that this is different from traditional automakers that have a more rigorous product development process in order to get it “right the first time.”
Contact Eric D. Lawrence: elawrence@freepress.com. Become a subscriber.
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June 27, 2023 at 03:37AM
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