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China’s Car Buyers Have Fallen Out of Love With Foreign Brands, Domestic companies are now selling more vehicles than their multinational rivals

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China’s Car Buyers Have Fallen Out of Love With Foreign Brands, Domestic companies are now selling more vehicles than their multinational rivals​

Domestic companies are now selling more vehicles than their multinational rivals, which have failed to keep up with Chinese consumers’ demand for electric cars and S.U.V.s.

14china-foreign-automakers-06-cwmt-superJumbo.jpg

A showroom for one of China’s electric car companies, Avatr, in Shanghai, the site of an auto show next week.Credit...Qilai Shen for The New York Times


By Keith Bradsher
Reporting from Shanghai
April 14, 2023, 5:00 a.m. ET

For years, foreign automakers in China had a bead on customers drawn to luxury brands, like the Cao family in Shanghai. Not anymore.

Ben Cao and his wife, Rachel, both 36, are trading down from two Porsches to one, a gasoline-fueled $290,000 Porsche 911 sports car, and buying their first electric vehicle, a $70,000 sport utility vehicle designed and manufactured in China by a company called Li Auto.

“If you’re sitting in a Li Auto, the first feeling is of luxury,” said Mr. Cao, a business consultant.

The rapid rise of Chinese electric carmakers like Li Auto, BYD, Nio and Xpeng Motors is the main preoccupation of the executives, engineers and designers arriving in Shanghai for the start of the city’s auto show next Tuesday. The country is now the world’s largest car market, and the home teams are routing multinational competitors that had until now mined the riches of China’s giant pool of customers.

Buyers like the Caos, and China’s car companies, have embraced electric vehicles much more rapidly than almost anyone anticipated.

The rise of Chinese auto companies, often subsidized by local governments in cities where they have factories, is another illustration of the country’s dominance in electric cars. China now manufactures and sells — at home and abroad — most of the world’s electric cars. Its prowess extends to the entire value chain for electric cars: It makes almost all of the cars’ electric motors and refines most of the chemicals used for lithium batteries. China even leads in developing what could be the next generation of technology, sodium batteries.

More than 80 percent of the electric cars sold in China last year were made by domestic automakers. Last autumn, they overtook multinational companies in the total number of gasoline-powered or electric cars sold each month.

“Multinationals’ market share in China will likely continue to decrease due to the continuous development of Chinese automakers, especially in the electric car segment,” said Stephen W. Dyer, a managing director in the Shanghai office of Alix Partners, a consulting firm.

As foreign automakers encounter problems in China, they are being pushed to shift more quickly to electric cars in Europe and the United States. The European Union and California want automakers to sell only zero-emission vehicles by 2035. And the Biden administration this week proposed emissions rules that would effectively require about two-thirds of new passenger cars sold in the United States to be electric by 2032 — standards that some automakers have complained are too stringent.

With a couple of exceptions like Tesla, which China welcomed in 2018 for its technology, Beijing has compelled foreign companies to operate through joint ventures with Chinese automakers. Over the past four decades, multinational companies have trained an entire generation of Chinese auto engineers — many of whom now work for highly competitive domestic rivals.

Today the number of cars sold by the foreign companies’ joint ventures has plummeted as sales of gasoline-powered vehicles have shrunk and E.V.s have soared. Electric cars were almost a quarter of China’s market last year, compared with less than 6 percent in the United States, and are expected to be over a third by the end of this year.
Ford Motor sold one million cars and light trucks in China in 2016 and in 2017 but barely 400,000 last year. Hyundai Motor, the South Korean giant, sold 1.8 million cars in China in 2016 and only 385,000 last year.
General Motors, which once vied with Germany’s Volkswagen for market leadership, has lost nearly half its sales in China. G.M. would be faring even worse if not for Wuling, a joint venture in which G.M. has a 44 percent stake. Wuling sells ultra-cheap pickup trucks and microvans that cost $4,800 to $21,800 and have slender profit margins.

The market share of China’s domestic car companies rose to 52 percent in the last quarter of 2022, from 47 percent the year before, largely on a huge rise in electric vehicle sales. The best-selling brand is BYD, in which Warren E. Buffett was an early investor. It now holds 10.3 percent of the car market, up from 2.1 percent four years ago and supplanting the Volkswagen brand as China’s leader.

Image
A light-purple S.U.V. and the front of a green one on the floor of a bright showroom.

BYD has overtaken Volkswagen as the best-selling brand in China, with 10.3 percent of the market.Credit...Qilai Shen for The New York Times

Volkswagen has also lost share, although less so than most foreign automakers. It plans to hold the worldwide introduction of its new ID.7 electric sedan in Shanghai on Monday.

A Volkswagen spokesman said the company had already doubled sales of its ID. series of electric cars last year, and was refusing to cut prices like some competitors just to maintain the number of cars sold. G.M. plans to introduce four new electric vehicles this year in China for its Buick, Cadillac and Chevrolet brands, and plans to convert more than half its factory capacity in China to electric cars by 2030.

Volkswagen is so concerned about the China market that it chartered two flights from Germany to Shanghai to bring board members of the Volkswagen Group and its VW, Audi and Porsche brands to the auto show, said a person familiar with the company’s plans, who spoke on the condition of anonymity because the plans were not public. Volkswagen declined to comment on its auto show travel arrangements.

Electric vehicle sales have grown more slowly this year after national subsidies for purchases expired at the end of December. Sales of gasoline-powered cars have plunged as a purchase tax on them has been restored after a suspension during the pandemic.

Tesla, which sells only electric cars, has had slower growth lately than Chinese electric car manufacturers, prompting the company to cut prices. That has set off a wave of discounting. Many consumers have waited to buy cars while watching whether electric car subsidies or purchase tax reductions will be restored.

“The weakness should be short term, because the weak sales were caused by the price chaos in March,” said Cui Dongshu, the secretary general of the China Passenger Car Association.

Five new S.U.V.s in the foreground attract a segment of the crowd filling a spacious convention hall, viewed from slightly above.

A Nio display at the Shanghai show in 2021. “The Chinese companies have the hottest battery electric vehicles,” said Bill Russo, a former chief executive of Chrysler China.Credit...Gilles Sabrié for The New York Times

Multinational companies including Volkswagen and G.M. had introduced electric cars that looked like their gasoline-powered models, with the hope of achieving a gradual transition. But Chinese consumers have gravitated instead toward the flashiest electric car exteriors and interiors available.

Mr. Cao, the Porsche enthusiast, dismisses most designs of multinational automakers as dull.

“They are far behind, no matter whether it is the U.S. ones and even the German ones,” he said. “They don’t even seem to be in the same age.”

Car fashions change quickly in China. Mr. Cao said that he was active in a 350-member club of Chinese buyers of the Sport Turismo version of the Porsche Panamera sedan, and that he knew of at least 50 others who, like him, were buying the Li Auto L9 sport utility vehicle.

Unlike most large S.U.V.s on the global market, the L9 is electric. It has a small gasoline engine as a backup that can recharge the vehicle’s hefty battery pack. But the engine does not provide power to move the vehicle itself.

Mr. Cao said he doubted he would need the backup engine. He plans to drive the S.U.V. for day trips to large parks on the outskirts of Shanghai, recharging it at home each night. Such outings have become popular in China with the end of “zero Covid” quarantines and municipal lockdowns. For longer travel to other cities, he said, he would fly or take one of China’s many bullet trains.

Even the maneuvering for choice display locations at auto shows like the one in Shanghai has changed. Until the last several years, Chinese automakers vied to put their displays close to multinational brands like Mercedes-Benz, in the expectation that Chinese car buyers would flock to the multinational brands and might see the local brands along the way.

But now, it’s Chinese electric car brands that other companies want to surround on the showroom floor, said Bill Russo, a former chief executive of Chrysler China. “You want to be closer to them — the Chinese companies have the hottest battery electric vehicles,” he said. “Foreign automakers don’t have the same halo now.”
Two people in silhouette walk at night past a brightly lit auto showroom with Chinese characters on the window.

An Xpeng Motors showroom in Shanghai. Last year, domestic companies gained a majority of the Chinese auto market, at 52 percent.Credit...Qilai Shen for The New York Times

 
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Multinational companies including Volkswagen and G.M. had introduced electric cars that looked like their gasoline-powered models, with the hope of achieving a gradual transition. But Chinese consumers have gravitated instead toward the flashiest electric car exteriors and interiors available.

Mr. Cao, the Porsche enthusiast, dismisses most designs of multinational automakers as dull.

“They are far behind, no matter whether it is the U.S. ones and even the German ones,” he said. “They don’t even seem to be in the same age.”
Agreed 100%.
 
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Legacy cars are fast losing appeal to the Chinese customers in China, cars now are no longer just a vehicle for getting around. If western and Japanese car makers lose their market in China, don't know what else they can still sell in China.
 
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China’s Car Buyers Have Fallen Out of Love With Foreign Brands, Domestic companies are now selling more vehicles than their multinational rivals​

Domestic companies are now selling more vehicles than their multinational rivals, which have failed to keep up with Chinese consumers’ demand for electric cars and S.U.V.s.

14china-foreign-automakers-06-cwmt-superJumbo.jpg

A showroom for one of China’s electric car companies, Avatr, in Shanghai, the site of an auto show next week.Credit...Qilai Shen for The New York Times


By Keith Bradsher
Reporting from Shanghai
April 14, 2023, 5:00 a.m. ET

For years, foreign automakers in China had a bead on customers drawn to luxury brands, like the Cao family in Shanghai. Not anymore.

Ben Cao and his wife, Rachel, both 36, are trading down from two Porsches to one, a gasoline-fueled $290,000 Porsche 911 sports car, and buying their first electric vehicle, a $70,000 sport utility vehicle designed and manufactured in China by a company called Li Auto.

“If you’re sitting in a Li Auto, the first feeling is of luxury,” said Mr. Cao, a business consultant.

The rapid rise of Chinese electric carmakers like Li Auto, BYD, Nio and Xpeng Motors is the main preoccupation of the executives, engineers and designers arriving in Shanghai for the start of the city’s auto show next Tuesday. The country is now the world’s largest car market, and the home teams are routing multinational competitors that had until now mined the riches of China’s giant pool of customers.

Buyers like the Caos, and China’s car companies, have embraced electric vehicles much more rapidly than almost anyone anticipated.

The rise of Chinese auto companies, often subsidized by local governments in cities where they have factories, is another illustration of the country’s dominance in electric cars. China now manufactures and sells — at home and abroad — most of the world’s electric cars. Its prowess extends to the entire value chain for electric cars: It makes almost all of the cars’ electric motors and refines most of the chemicals used for lithium batteries. China even leads in developing what could be the next generation of technology, sodium batteries.

More than 80 percent of the electric cars sold in China last year were made by domestic automakers. Last autumn, they overtook multinational companies in the total number of gasoline-powered or electric cars sold each month.

“Multinationals’ market share in China will likely continue to decrease due to the continuous development of Chinese automakers, especially in the electric car segment,” said Stephen W. Dyer, a managing director in the Shanghai office of Alix Partners, a consulting firm.

As foreign automakers encounter problems in China, they are being pushed to shift more quickly to electric cars in Europe and the United States. The European Union and California want automakers to sell only zero-emission vehicles by 2035. And the Biden administration this week proposed emissions rules that would effectively require about two-thirds of new passenger cars sold in the United States to be electric by 2032 — standards that some automakers have complained are too stringent.

With a couple of exceptions like Tesla, which China welcomed in 2018 for its technology, Beijing has compelled foreign companies to operate through joint ventures with Chinese automakers. Over the past four decades, multinational companies have trained an entire generation of Chinese auto engineers — many of whom now work for highly competitive domestic rivals.

Today the number of cars sold by the foreign companies’ joint ventures has plummeted as sales of gasoline-powered vehicles have shrunk and E.V.s have soared. Electric cars were almost a quarter of China’s market last year, compared with less than 6 percent in the United States, and are expected to be over a third by the end of this year.
Ford Motor sold one million cars and light trucks in China in 2016 and in 2017 but barely 400,000 last year. Hyundai Motor, the South Korean giant, sold 1.8 million cars in China in 2016 and only 385,000 last year.
General Motors, which once vied with Germany’s Volkswagen for market leadership, has lost nearly half its sales in China. G.M. would be faring even worse if not for Wuling, a joint venture in which G.M. has a 44 percent stake. Wuling sells ultra-cheap pickup trucks and microvans that cost $4,800 to $21,800 and have slender profit margins.

The market share of China’s domestic car companies rose to 52 percent in the last quarter of 2022, from 47 percent the year before, largely on a huge rise in electric vehicle sales. The best-selling brand is BYD, in which Warren E. Buffett was an early investor. It now holds 10.3 percent of the car market, up from 2.1 percent four years ago and supplanting the Volkswagen brand as China’s leader.

Image
A light-purple S.U.V. and the front of a green one on the floor of a bright showroom.

BYD has overtaken Volkswagen as the best-selling brand in China, with 10.3 percent of the market.Credit...Qilai Shen for The New York Times

Volkswagen has also lost share, although less so than most foreign automakers. It plans to hold the worldwide introduction of its new ID.7 electric sedan in Shanghai on Monday.

A Volkswagen spokesman said the company had already doubled sales of its ID. series of electric cars last year, and was refusing to cut prices like some competitors just to maintain the number of cars sold. G.M. plans to introduce four new electric vehicles this year in China for its Buick, Cadillac and Chevrolet brands, and plans to convert more than half its factory capacity in China to electric cars by 2030.

Volkswagen is so concerned about the China market that it chartered two flights from Germany to Shanghai to bring board members of the Volkswagen Group and its VW, Audi and Porsche brands to the auto show, said a person familiar with the company’s plans, who spoke on the condition of anonymity because the plans were not public. Volkswagen declined to comment on its auto show travel arrangements.

Electric vehicle sales have grown more slowly this year after national subsidies for purchases expired at the end of December. Sales of gasoline-powered cars have plunged as a purchase tax on them has been restored after a suspension during the pandemic.

Tesla, which sells only electric cars, has had slower growth lately than Chinese electric car manufacturers, prompting the company to cut prices. That has set off a wave of discounting. Many consumers have waited to buy cars while watching whether electric car subsidies or purchase tax reductions will be restored.

“The weakness should be short term, because the weak sales were caused by the price chaos in March,” said Cui Dongshu, the secretary general of the China Passenger Car Association.

Five new S.U.V.s in the foreground attract a segment of the crowd filling a spacious convention hall, viewed from slightly above.

A Nio display at the Shanghai show in 2021. “The Chinese companies have the hottest battery electric vehicles,” said Bill Russo, a former chief executive of Chrysler China.Credit...Gilles Sabrié for The New York Times

Multinational companies including Volkswagen and G.M. had introduced electric cars that looked like their gasoline-powered models, with the hope of achieving a gradual transition. But Chinese consumers have gravitated instead toward the flashiest electric car exteriors and interiors available.

Mr. Cao, the Porsche enthusiast, dismisses most designs of multinational automakers as dull.

“They are far behind, no matter whether it is the U.S. ones and even the German ones,” he said. “They don’t even seem to be in the same age.”

Car fashions change quickly in China. Mr. Cao said that he was active in a 350-member club of Chinese buyers of the Sport Turismo version of the Porsche Panamera sedan, and that he knew of at least 50 others who, like him, were buying the Li Auto L9 sport utility vehicle.

Unlike most large S.U.V.s on the global market, the L9 is electric. It has a small gasoline engine as a backup that can recharge the vehicle’s hefty battery pack. But the engine does not provide power to move the vehicle itself.

Mr. Cao said he doubted he would need the backup engine. He plans to drive the S.U.V. for day trips to large parks on the outskirts of Shanghai, recharging it at home each night. Such outings have become popular in China with the end of “zero Covid” quarantines and municipal lockdowns. For longer travel to other cities, he said, he would fly or take one of China’s many bullet trains.

Even the maneuvering for choice display locations at auto shows like the one in Shanghai has changed. Until the last several years, Chinese automakers vied to put their displays close to multinational brands like Mercedes-Benz, in the expectation that Chinese car buyers would flock to the multinational brands and might see the local brands along the way.

But now, it’s Chinese electric car brands that other companies want to surround on the showroom floor, said Bill Russo, a former chief executive of Chrysler China. “You want to be closer to them — the Chinese companies have the hottest battery electric vehicles,” he said. “Foreign automakers don’t have the same halo now.”
Two people in silhouette walk at night past a brightly lit auto showroom with Chinese characters on the window.

An Xpeng Motors showroom in Shanghai. Last year, domestic companies gained a majority of the Chinese auto market, at 52 percent.Credit...Qilai Shen for The New York Times

German and Japanese cars have more snicksnack, more expensive. And there are taxes. Then there is a cultural thing, I don’t know about Chinese consumers when coming to cars. Here in Germany cars are much a cultural love relationship. People treat cars like a baby, like a family member. Then the country must have modern highways otherwise cars can’t run. There is no speed limit on Germany super highways. I can accelerate my Audi to 200kmh in minutes then further to the limit of 250kmh. That’s the max limit on most German car brands. Porsche is the exception it has no speed limit.

 
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German and Japanese cars have more snicksnack, more expensive. And there are taxes. Then there is a cultural thing, I don’t know about Chinese consumers when coming to cars. Here in Germany cars are much a cultural love relationship. People treat cars like a baby, like a family member. Then the country must have modern highways otherwise cars can’t run. There is no speed limit on Germany super highways. I can accelerate my Audi to 200kmh in minutes then further to the limit of 250kmh. That’s the max limit on most German car brands. Porsche is the exception it has no speed limit.

Chinese used to be crazy about German and Japanese cars too for decades, but not anymore, trends change with time.
 
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Chinese used to be crazy about German and Japanese cars too for decades, but not anymore, trends change with time.
change of consumer habits in China. anti west sentiment. German electric cars are ways behind. Ccp makes foreign business hard to make money, even harder to withdraw money from China. Tough chinese competitions. probably many factors combined.
 
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change of consumer habits in China. anti west sentiment. German electric cars are ways behind. Ccp makes foreign business hard to make money, even harder to withdraw money from China. Tough chinese competitions. probably many factors combined.
all wrong, mr viet..
 
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change of consumer habits in China. anti west sentiment. German electric cars are ways behind. Ccp makes foreign business hard to make money, even harder to withdraw money from China. Tough chinese competitions. probably many factors combined.
Your beloved toyota ceo just admitted failure in making ev car during the press conference. :)
 
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EV cars r kool. When I stop at a red light driving a Toyota, can never catch up to the Tesla in front when the light turns green. EVs have really fast acceleration and braking. Make ICE cars like Toyotas and BMWs look like dinosaurs from the Stone Age...
 
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China doesn't want American cars anymore — that's bad news for Ford and GM​

Alexa St. John and Nora Naughton
Apr 22, 2023, 5:15 PM GMT+8
  • American car companies' sales in China have been on a steady decline.
  • "The market has totally changed," Ford CEO Jim Farley said about China
  • Without China, American car companies will likely lean into US electric vehicle sales.
Chinese automakers are giving US car companies a run for their money, especially as the momentum behind electric vehicles accelerates — and that could force the likes of Ford and GM to make some hard decisions.

Other than Tesla, popular US auto brands lost major ground in China last year, the world's largest car market and critically important to manufacturers. GM's car sales there fell 20% from 2021, while Ford's declined 33.5%, according to advisory firm Automobility Ltd.

"The market has totally changed," Ford CEO Jim Farley told reporters at a Thursday charity event in Detroit. "We're going to have to rethink what the Ford brand means in a place like China."

That's especially true as EVs take center stage, Farley said, noting that he has learned the luxury brands that do best in the Chinese market sell only electric vehicles.

Chinese EV-maker market share in China rose 17% in 2022, while that of foreign automakers dropped 11%. Some of this can be attributed to Chinese car companies' ability to build better and cheaper cars, especially EVs, that consumers are keen to buy.

"It's pretty much the consensus belief that the US automakers are increasingly irrelevant" in China, Deutsche Bank analyst Edison Yu told Insider. "As we make this transition to EV, the GMs, the Fords in China will really have to be very bold and aggressive to find success."

"At some point there needs to be either a decision to continue or to pull out," Yu added. "We're at a point where one does need to make a decision on their future."

Car companies will double down on US buyers and EVs

As the industry bounced back from the Great Recession, and China became the fastest-growing (and EV friendly) car market in the world, American car companies rushed to enter the market.


But as political tensions increase between China and the US, operating in China is starting to become more of a risk for US companies.

Add in the fact that Chinese brands spent the last several years sapping up industry know-how from joint-ventures with US brands, and the Chinese market suddenly becomes a much more hostile place for an American company.

That means that US companies will redouble their EV efforts at home, where they can count on a more reliable and loyal customer base. The one kink in that plan is Elon Musk and his ongoing price war.

"Price wars are breaking out everywhere. Who's going to blink for growth?" Farley said at the Thursday event.

The China vs America face-off is at a stalemate – for now

While American companies lose ground in China, there is a bright spot. The pandemic forced automakers to make more with less, by shifting their supply chains and focusing on the markets where they make the biggest profit margins.

GM largely led the charge to exit money-losing markets, pulling out of Europe in 2017 and later leaving Russia, India and Australia. The company still operates in China, but is struggling to defend its market share. GM's China sales fell 25% in the first quarter of 2023 after retreating 20% last year.

The retreat from China and a hyper-focus on the US could be risky.

Making up the difference in Europe isn't likely to be an option for US car companies — Europe's a market which Chinese car makers are already aggressively chasing after, and the competition is increasingly fierce.

While there aren't currently any Chinese car brands for sale in the US, the concern is that eventually the Chinese could eventually make a play to upend the US market.

"What happens in China will not stay in China," Bill Russo, CEO of Automobility, told Insider in January.

 
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Tesla delivers 76,663 vehicles in China in Mar, exports 12,206 from Shanghai plant​

Tesla's share of the NEV market in China was 14.12 percent in March and 20.02 percent in the BEV market.
2023041013474626.jpg


Tesla (NASDAQ: TSLA) delivered a near-record high number of vehicles in China in March, with its Shanghai plant producing vehicles in the second half of each quarter primarily for local deliveries.
 
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Tesla delivers 76,663 vehicles in China in Mar, exports 12,206 from Shanghai plant​

Tesla's share of the NEV market in China was 14.12 percent in March and 20.02 percent in the BEV market.
2023041013474626.jpg


Tesla (NASDAQ: TSLA) delivered a near-record high number of vehicles in China in March, with its Shanghai plant producing vehicles in the second half of each quarter primarily for local deliveries.
Tesla accounts for 40% of China's Q1 EV exports.
 
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Naahhh...Each got an email and/or text saying that if you do not buy a Chinese brand car, you social credit will drop. And you must keep it quiet.
 
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