China business - German manufacturers with problems in the world's largest car market

Automobilwoche reports an interesting observation in the southern Chinese city of Shenzhen: electric cars can be recognized by green license plates. The streets are full of them. It is mainly Chinese car brands that drive with green license plates. The combustion engines drive with a blue license plate. Only here are German brands clearly visible.

Total sales of German car models in China are impressive: a total of 4.4 million vehicles were sold in 2022, which corresponds to a market share of 19.1%. But the future belongs to e-mobility, and in this segment the Germans only had a share of five percent. Tesla is the only foreign EV manufacturer to make the Chinese top ten. The market is dominated by the Chinese companies BYD, Nio and Xpeng.

The recent auto show in Shanghai showed that the Chinese have a keen interest in dominating the domestic market. Although a total of 3.2 million German vehicles were sold in China, and there was even a strong increase in electric cars of almost 70%, sales in absolute figures in 2022 were still just over 155,000 vehicles.

The Chinese want more market share in Germany

For the German manufacturers, who are used to success, it is also difficult to face additional headwind in the domestic market in the current situation. One had become accustomed to the Asian competition from Japan and South Korea, but now the Chinese are targeting the German market with models for small cars and in the middle class at very competitive prices. A strong offensive in the low-price segment of e-cars is expected in Germany in particular. In this context, the appearances of Chinese manufacturers at the IAA Mobility 2023 in Munich in September are eagerly awaited.

The problem in Germany also has to do with the energy transition. Fewer and fewer people are buying a vehicle as a status symbol, while alternative mobility concepts are experiencing an upswing. No wonder that the German premium brand manufacturers are concentrating more and more on non-European countries, where the reputation is still good and the potential buyers are larger.

China is already the world's 3rd auto exporter

Cars from China are on the rise worldwide. The Chinese automobile association CAAM recently informed that Chinese car exports have increased to around 2.5 million vehicles since 2020, which corresponds to a threefold increase. This puts China in third place as a car exporter. The old car nations Japan (3 million cars) and Germany (2.6 million cars) are in first and second place.

The Chinese are expected to overtake both countries in the near future as demand for Chinese-made cars is growing rapidly. The Chinese are now benefiting from the fact that they started building electric cars early. In addition, they have positioned themselves well in connectivity and autonomous driving.

What the Chinese in Germany are still missing

What the Chinese manufacturers are still missing in Germany are established dealers as sales partners in order to use existing dealer networks and locations. These are not only important for sales, but especially for vehicle service. Although e-cars require less maintenance and repairs, you can't do without them. The German manufacturers are in a much better position here and enjoy a great advantage in terms of trust among local customers.

From a German point of view, it is positive that in 2022 every second newly registered electric car will come from a German manufacturer. The local car industry currently offers more than 90 e-models. Ascending trend. When it comes to the quality of the products, the German manufacturers are still leaders. It will be exciting to see how the competition develops. The Chinese competition is to be taken very seriously. She has now managed not to be smiled at like she was a few years ago.