Chinese automakers are poised to rapidly expand their presence in the global automotive market, with a projected market share of 33% by 2030, according to a report by AlixPartners. This growth is expected to come primarily from outside of China, as sales are forecasted to increase from 3 million this year to 9 million by 2030. This represents a significant shift from 3% to 13% of market share over the next decade.
The expansion of Chinese automakers is causing concern among traditional automakers and politicians worldwide. There is apprehension that the competitively priced Chinese vehicles will flood the market and undercut domestically produced models, particularly in the all-electric vehicle segment. The fear is not unfounded, as Chinese brands are expected to grow across all global markets.
However, AlixPartners predicts that the expansion of Chinese automakers will be more limited in Japan and North America, including the United States. This is due to stricter vehicle safety standards in these regions and the recently announced 100% tariff on imported Chinese electric vehicles. Chinese automakers are projected to achieve a 3% market share in North America, primarily in Mexico, where one in five vehicles is expected to be a Chinese brand by 2030.
In contrast, Chinese automakers are expected to exponentially grow their market share in other major regions of the world. These regions include Central and South America, Southeast Asia, and the Middle East and Africa. In Europe, Chinese automotive brands are projected to double their market share from 6% to 12% by 2030.
Chinese automakers have several advantages that contribute to their expansion plans. They have cost advantages and employ localized production strategies, allowing them to implement a build-where-you-sell approach in non-China markets. Additionally, their vehicles are highly tech-enabled and cater to evolving consumer preferences for design and innovation.
AlixPartners highlights that traditional automakers must adapt their business development processes and the pace of vehicle development to remain competitive with Chinese automakers. The report emphasizes that operating under business-as-usual principles will lead to obsolescence. Chinese automakers have demonstrated their ability to create new products in half the time of legacy automakers, primarily by designing and testing to meet standards rather than overengineering. They also enjoy a 35% cost advantage due to their “Made-in-China” production.
In conclusion, the rapid expansion of Chinese automakers is set to reshape the global automotive market. Their cost advantages, localized production strategies, and tech-enabled vehicles position them as disruptors in the industry. Traditional automakers must rethink their approaches to business development and vehicle development to remain competitive in this evolving landscape. The rise of Chinese automakers presents both challenges and opportunities for the industry as a whole.
