"Many European experts believe that Chinese cars are promising. They perform well in crash tests, are often beautifully designed, offer reasonable equipment even in the base version – and**unbeatable. However, a December 10 article in the German newspaper Wirtschaftsaut titled "What may stop the rise of Chinese electric vehicles in Germany" pointed out that Chinese brands still have a key weakness - the lack of service point networks of Chinese automakers in Germany and Europe. Many Chinese players are also financially vulnerable.
There are many Chinese car brands that have entered Europe20 to 30 Chinese brands want to gain a foothold in Europe
At the end of November, Chinese automaker BYD announced that it had reached a "historic milestone": the 6 millionth new energy vehicle rolled off the assembly line at its plant in Zhengzhou, China. In just three months, BYD's car production increased from 5 million to 6 million. BYD is a success story: it took 13 years to produce its 1 millionth electric car. BYD currently has offices in 58 countries around the world, including Germany.
Like BYD, Aiways, MG, Geely and NIO have sprung up in Germany. Chery also expects to start sales in Germany in the second quarter of 2024.
The Economic Weekly article Erguna Lumali, chairman of the General Labor Union of the Mercedes-Benz Group, recently visited China and was able to drive and inspect the cars of Chinese automakers there. "Chinese manufacturers are currently a little ahead of us in areas such as digitalization, infotainment and autonomous driving, and it's hard for us to keep up," he said. We're getting better, but we have to hurry and move faster. ”
In any case, the Chinese have big sales plans: "There are about 20 to 30 Chinese brands currently trying to gain a foothold in Europe," said Benedict Meyer of the Institute for Automotive Economics (IFA). " So far, the Chinese have a market share of about 1% in new cars in Germany. By 2025, it is likely to reach 3%. The growth is enormous.
BYD's dealers also sell Mercedes-BenzChinese automakers lack a network of service points
But there is still a key weakness for Chinese brands: "Chinese manufacturers come to Europe with very strong products, but that's only one of the keys to success," says Peter Fentel, Capgemini's head of technology and innovation, and sales and service are just as important.
Fabian Brandt, partner and global head of automotive and industrial goods at Oliver Wyman, said service plays an important role throughout the life cycle of a vehicle. service" determines whether the customer is satisfied or not. Anyone who is new to the European market must have a good service network. If players don't, it damages the brand. The lack of service could slow the rise of Chinese brands. ”
China's share of electric vehicle exports to Europe is increasing, but what if Chinese cars need to go to repair shops?Then sometimes there may be problems. In order to fully enter the German market, manufacturers need at least 100 car repair service points, according to Meyer.
Not all Chinese automakers have established a comprehensive network of service points. For example, NIO mainly provides door-to-door services to users through mobile "NIO Service Centers". In any case, there are not many users yet. From January to September 2023, NIO had only 885 new registrations. This is not enough to compensate for the high cost.
A Chinese car brand store in EuropeChinese players have "fragile financial resources".
In comparison, in the case of MG Motors, it is expected that there will be 20,000 newly registered cars in 2023. "This goal seems achievable at the moment," MG said. Polestar already has more than 200 service points in Germany and works with Volvo Cars Germany. More than 15,000 Polestar 2 units have been registered in Germany. Aiways relies on the ATU chain of auto repair services. Customers can travel to any of the approximately 500 ATU branches in Germany. To date, Aiways has sold around 3,000 U5 SUVs in Germany. And BYD's dealers also sell Mercedes-Benz in Germany.
The way to connect with large retail chains is particularly promising. Not only do they have dozens of car dealerships in the region, but they also have affiliated repair shops. This is how sales and service come together. Great Wall Motors, for example, relies on the Emil Frey Group, an importer in Germany. So far, the manufacturer has sold more than 4,000 Great Wall Ora 03s in Germany alone.
There's another risk to getting ready to go: according to advisor Brandt, many players from China also have "fragile financial resources". As a result, he estimates that "half of the brands currently targeting the European market will disappear again". The risk for owners of Chinese cars is whether they will continue to receive spare parts, especially software updates. If the manufacturer again withdraws from the market, it must theoretically comply with the law and continue to supply spare parts to existing customers.
Therefore, in order for Chinese manufacturers to gain a foothold in the European market, it is imperative to build a complete network of service points to give European drivers who have bought Chinese cars and want to buy Chinese cars a "reassurance".