We’ve all heard about the big plans of Chinese automakers
Just like Western car manufacturers and their electrification goals in the coming years, Chinese manufacturers are also racing to expand their activities beyond the national market. While some progress has been made with interesting results in specific regions, there is still a negative reputation among consumers abroad.
The Expansion Plan of Chinese Automakers
Chinese automotive brands such as SAIC, BYD, Geely, GAC, Chery, JAC, Dongfeng, Changan, and Great Wall have a two-fold expansion plan. These brands aim to reach both developed and developing economies with a range of products that cater to the different types of customers in those markets.
Global Progress
Last year, Chinese automotive manufacturers achieved double-digit market share in regions like the Middle East, Eurasia, and Africa, with a 10% market share. In Latin America, the market share increased by two percentage points compared to 2021. The market share of Chinese automotive brands in poor and developing economies increased from 4.79% in 2021 to 6.46% in 2022. In contrast, European brands lost 2.7 points of share and Koreans lost one point. Further progress was made in the first half of this year. For example, in South Africa, the market share increased from 6.08% in 2022 to 8.83% in H1 2023 for passenger cars. In Israel, the percentage jumped from 8.51% to 16.26% over the same period. Russian and Kazakhstan have also seen a significant increase in the market share of Chinese cars. Russia, isolated from the West due to sanctions, witnessed a market share increase from 20.17% in 2022 to 50.20% in the first half of 2023. Similarly, in neighboring Kazakhstan, Chinese brands rose from 9.39% in 2022 to 15.34% in H1 2023. Chinese brands are also penetrating Southeast Asia, with countries like Thailand seeing an increase from 9.39% in 2022 to 15.34% in H1 2023. In developed markets like Australia and New Zealand, players like MG are shaking up sales.
The Situation In Europe
Europe is a long-term dream for Chinese automakers, being one of the most important markets in the world. While some Chinese brands have been selling their cars in Europe for a few years, many more are expected to arrive in the region in the coming months. According to data from JATO Dynamics and other domestic sources, the share of Chinese brands in passenger car sales increased from 0.67% in 2021 to 1.57% in 2022, up to 2.37% in H1 2023. In countries like the UK, where MG is quickly climbing the ranks, market penetration of Chinese brands totaled 4.26% in H1 2023. In Italy, it’s 4.12%, and in Spain, it’s 3.45%.
Challenges in Reputation
Despite the progress made, Chinese cars still suffer from a reputation issue. Copyright problems, a history of low quality standards, and growing political tensions with Western societies have contributed to this negative perception. Many consumers are still reluctant to try Chinese cars, and surveys show that Chinese cars receive 62% negative reviews compared to 40% for Western brands. Changing this perception will require both investments and time.
Author: Felipe Munoz, Automotive Industry Specialist at JATO Dynamics
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