Behind the growth in exports is the sluggish demand for domestic automobiles.
Last year, China's overseas car sales soared to record levels and is expected to overtake Japan to top the global auto export list, marking a major change in the global auto industry landscape.
The Ministry of Industry and Information Technology said on Friday that China's total auto exports in 2023 will reach 4.91 million units, and it is expected to become the world's largest auto exporter. According to the latest Japan's automobile exports, Japan's automobile exports in 2023 are expected to be around 4.3 million units, which is lower than China's automobile export data.
China's major automotive export destinations include Western Europe, Southern Europe and Southeast Asia, particularly Belgium, Spain, the United Kingdom and Thailand. Russia, Mexico and other emerging markets, as well as Europe, are behind the surge in China's auto exports. Russia, in particular, has become the No. 1 market for China's auto exports, accounting for 17% of sales, a fourfold increase in growth compared to 2022.
At first glance, it seems to be an inspirational and cool article for Chinese cars to conquer overseas, but it is actually a survival text for leaving home.
Let's take a look at the inspirational Shuangwen first, China's auto exports will soar by 58% in 2023, and the export market will reach 4.91 million units. Among them, 177 electric vehicles will be exported in 202330,000 units, an increase of 671%, which means that 1 out of every 3 cars exported is an electric vehicle.
In 2023, China's automobile production and sales will both exceed the 30 million mark, maintaining the world's first place for 15 consecutive years.
Industry associations predict that in 2024, China's automobile production and sales will increase by 3% year-on-year to 31 million units, of which the production and sales of new energy vehicles will increase by 20%.
While China has been recognized as a global leader in electric vehicles, traditional gasoline-powered vehicles are still the main driver of growth, particularly with a surge in demand from Russia, Wall Street** noted.
Agence France-Presse poured cold water on the importance of China's title, given that Japanese brands produce twice as many cars in overseas factories as Japan itself (17 million by 2022).
Therefore, if you look at this problem from a rational point of view, you will find that Chinese automobiles are indeed gradually strengthening, but in fact, problems such as weak demand for automobiles, weak chains of automotive chips and chaotic market competition still make a lot of stumbling blocks for Chinese automobiles in 2023.
Joy and sorrow in the prosperous world
In terms of cars going overseas, the ambitions of car companies and the frequent successes of the first car seem to be a smooth road abroad. But in fact, if you want to talk about why going overseas in 2023 has become an important topic for Chinese automobiles, we must start from the domestic automobile situation.
In 2023, China's automobile production and sales will be 30.16 million and 30.09 million respectively, an increase of 116% and 12%. The production and sales of new energy vehicles, mainly electric vehicles, increased by 35.59 million units and 9.49 million units, respectively8% and 379%γ
Since the beginning of the year, China, the world's largest auto market, has performed strongly in 2023, and the data for 2023 confirms the latest signs that China has become a global powerhouse in the production and sales of automobiles, as well as exports, thanks in large part to the strength of agile electric vehicle manufacturers. BYD overtook Tesla as the world's largest seller of electric vehicles in the fourth quarter, although it was largely based on sales in China. But it's still good news and a big step forward.
At the same time, the share of Chinese brands is expected to increase from 56% last year to 63% in 2024, driven by increased brand recognition in the EV space and the rapid electrification of the industry.
The continued sluggishness in imports also illustrates the problem, with imports falling 12% year-on-year to below 720,000 units as of November, according to the China Automobile Dealers Association.
The rise of Chinese auto brands means that some foreign brands that once had a halo are gradually disappearing from the Chinese market. According to data from the first 11 months of this year, sales of French car brands in China fell by 41% in 2023, the largest decline. Japanese car sales fell 11%, while U.S. brand sales fell 14%γIn contrast, car sales in Germany increased by 25%, while Chinese car sales increased by 16%.
But that doesn't mean that Chinese automakers are all going well. According to statistics, only one-third of Chinese automakers have achieved their annual sales targets for 2023.
Of the 13 brands that disclosed annual sales figures, only four met their targets, led by electric vehicle maker Li Auto, which delivered 376,030 vehicles in 2023, 25% higher than its initial target of 300,000 units.
BYD achieved its ambitious goal of 3 million vehicles to sell 3.01 million vehicles by 2023 and, in the process, overtook Tesla Inc. to become the world's best-selling electric vehicle manufacturer.
Geely Auto is the only traditional incumbent automaker to have achieved its annual target so far, even though its electric vehicle brand Zeekr has only achieved 85% of its sales target.
Among the underperformers, Nio, Xpeng and Leapmotor all failed to meet their targets for the second year in a row, prompting them to reshuffle their management and make massive layoffs.
Preliminary data released by the China Passenger Car Association on Wednesday showed that while total sales of pure electric vehicles and plug-in hybrids rose 38 percent to 8.88 million units last year, they still fell short of expectations.
The growth of China's auto market is mainly driven by new energy vehicles and exports," said Cui Dongshu, secretary general of the China Automobile Association. "If automakers don't continue to perform well in both areas, it's easy to fall behind. β
He said demand for petrol vehicles is expected to shrink further, adding that switching to electric vehicles and expanding into more markets such as Russia could be the only way out for the laggards.
Towards a new stage of export
The pricing of electric vehicles in China is starting to gradually level with that of gasoline vehicles, and when most electric cars are as cheap as gasoline vehicles, it opens the way for wider adoption. Automakers trying to switch to battery electric and plug-in hybrid vehicles are at risk of profitability.
Fierce competition in terms of models and pricing has pushed more smaller players out of the game. Bloomberg's analysis of data from China's Automotive Technology and Research Center showed that only 82 of China's 92 NEV makers were able to sell at least one car in November.
Automotive analyst Joanna Chen said: "The rapid recession of China's economy after the pandemic** has led to more competitive markets in the market in 2023 than expected. She added that pricing headwinds are likely to continue for much of 2024 as consumer confidence remains volatile. "Automakers need to increase their discounts on electric vehicles in exchange for a breakthrough in sales. β
In addition, a reality is emerging, the growth rate of automobile exports is high, and the growth rate of domestic sales is relatively low. In other words, the flip side of export growth is sluggish domestic demand for automobiles. That's because sales growth is driven more by exports than by domestic demand for automobiles.
In fact, China's demand (which can be measured by subtracting exports from total car shipments and adding imports) has stopped growing for years amid a weak economy.
In 2017, China's annual vehicle shipments (excluding exports) reached a record high of 28 million units. From 2018 to 2022, that number dropped from 27 million to 23.8 million. And domestic shipments in 2023 show no signs of returning to 2017 levels.
Not only China, but also the world's automobile demand is tepid, and exporting to foreign countries or building factories abroad also faces problems such as weak links in automotive chips and chaotic market competition, as well as policy restrictions on Chinese automobiles in Europe and the United States.
But in fact, we still have a long way to go, because according to experience, the export volume of the world's major automobile powers has not maintained linear growth, and has generally experienced three stages: domestic sales, overseas exports and overseas production.
We are now in the process of moving from the second stage to the third stage, because when the export volume reaches a certain scale, in order to avoid the best barriers and cost efficiency, the major automobile exporting countries will generally adopt global layout and localized production to replace the export of complete vehicles, and the export volume will also fall back and stabilize at a certain scale.
This year, China's automobiles are facing the most advanced policy issues in Europe and the United States is moving towards the second stage of the challenge, so China's automobiles still have a lot of room for development and a long way to go, and "export first" is just another milestone.