Chinese automakers are anticipated to keep growing rapidly outside of their home country in order to achieve 33 percent of the global automobile market share by 2030, as per a report by consulting firm AlixPartners.
According to the report, Chinese automakers are increasingly setting the standard for an industry historically steered by the West, Japan and South Korea. By 2030, Chinese brands will be a dominant force around the world, selling nine million units outside China, for a 33 percent global share.
Mark Wakefield, global co-leader of the automotive and industrial practice at AlixPartners, said the global auto industry has been shaped by several inflection points over the past half-century, including the emergence of Japanese production techniques in the 1970s, then the rise of the Koreans, and the more recent disruption caused by Tesla. “China is the industry’s new disruptor – capable of creating must-have vehicles that are faster to market, cheaper to buy, advanced on tech and design, and more efficient to build. For traditional OEMs, keeping pace with China’s strongest brands will require more than a course correction,” Wakefield said.
Wakefield urged companies to avoid underestimating the scale of change the automotive industry is set to experience over the second half of this decade. By 2030, NEVs will represent nearly half of global vehicle sales, according to the outlook. Moreover, China’s domestic brands will own one-third of the international market, and automotive suppliers – currently underperforming OEMs globally in profit margins – could gain leverage amid a price war, and demand for more advanced electrical and software vehicle capabilities.
Chinese automakers taking centre stage
The report stated that globally the automotive suppliers are reporting a 10.6 percent operating margin on average, trailing OEMs by nearly two percentage points. In China, where OEMs are more focused on near-term market share growth, the 10.4 percent supplier margin outpaces OEMs by 3.3 percentage points. Chinese EV automakers have ripped up the playbook related to vehicle development time, creating new products in half the time (40 months vs. 20 months), mainly by designing and testing to sufficiently meet standards vs. over-engineering. China-branded models, meanwhile, are two-three years fresher than non-China brands, averaging only 1.6 years in market.
Chinese brands enjoy a 35 percent cost advantage, affording flexibility (in Europe and elsewhere) to lower prices to offset tariffs. This advantage is built on lower labor costs and higher vertical integration from raw materials to component suppliers to final assembly to selling to other automakers. Further smoothing the path for export is the quick ramp up of overseas shipping capacity, prompting Chinese automakers to secure their own transport capacity.
In fact, many Chinese automakers utilize a direct-to-consumer sales approach, enabling a unified and transparent customer experience. These automakers use multiple channels for marketing and sales, resulting in higher consumer engagement.
Forecast about global automotive sector
Sales in Europe will increase 2 percent in 2024, and track marginal growth of roughly 1 percent through 2027, led by Eastern Europe, as per the report. U.S. sales will increase 3 percent in 2024, with growth juiced by resurgent interest in PHEVs. By 2030, ICE vehicles will only represent 35 percent of sales, upstaged by NEVs (new-energy vehicles, meaning battery electrics and plug-in hybrid electric vehicles), which will hit 41 percent share by that time.
China sales will grow a relatively modest 4.7 percent in 2024 to 26.7 million vehicles. However, that number will exceed 32 million by 2030, 70 percent of which will be sold by China brands. Moreover, NEV sales – including PHEVs (plug-in hybrid electric vehicles) – will surge 32 percent in 2024 globally. NEV share to reach 45 percent by 2030.
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