The rapid rise of China’s homegrown electric vehicle (EV) makers, such as BYD and Xpeng (XPEV), is upending the largest passenger car market on the planet and leaving the world’s biggest carmakers on the losing end.
The latest sign of the steep challenges facing traditional automakers came Monday, when Volkswagen warned it could close plants in Germany for the first time in its history, in an effort to cut costs.
In China, its single largest market, the German car giant has seen its deliveries tumble by more than a quarter from just three years ago to 1.34 million in the first half of this year. And last year, the company lost its crown as China’s biggest-selling car brand to BYD, shedding a title it had held since at least 2000.
Ford (F) and General Motors (GM) are also among firms seeing sales and market share vanish in China as local consumers spurn overseas brands to buy Chinese instead.
In July, foreign carmakers’ share of auto sales in China slipped to 33% from 53% in the same month two years earlier, according to data from the China Passenger Car Association (CPCA).
Automakers’ profits in China are coming under pressure too. In the quarter ended June 30, income from Toyota’s Chinese joint ventures plummeted 73% compared with a year earlier, according to financial statements.
Generational shifts have also helped Chinese brands.
https://www.msn.com/en-us/money/markets/chinese-automakers-add-more-market-share-despite-heavy-investments-by-foreign-companies/ar-AA1q3CXK
Chinese automakers add more market share despite heavy investments by foreign companies
Much of the growth, from a forecast 21% market share this year, is expected to come outside of China. Sales outside of China are expected to grow from 3 million this year to 9 million by 2030, representing growth from 3% to 13% of market share by the end of this decade.
The rapid expansion of Chinese automakers is a growing concern for legacy automakers and politicians globally.
“China is the industry’s new disruptor – capable of creating must-have vehicles that are faster to market, cheaper to buy, advanced on tech and design, and more efficient to build,” Mark Wakefield, global co-leader of the automotive and industrial practice at AlixPartners, said in a statement
Chinese automakers are expanding because they have cost advantages, localized production strategies that will enable a build-where-you-sell strategy in non-China markets, and highly tech-enabled vehicles that meet evolving consumer preferences for design and freshness, according to the report.
Chinese EV automakers create new products in half the time of legacy automakers — 40 months vs. 20 months — mainly by designing and testing to sufficiently meet standards versus overengineering. They also have a 35% “Made-in-China” cost advantage.
Could be that Ford GM & VW are toast.