The Great Automobile Leap


BYD / Bloomberg

The Celestial Empire is becoming the world leader in automobile exports.

As Xinhua news agency reported on June 10, according to the China Association of Automotive Manufacturers /CAAM/, in May this year sales of Chinese cars grew by 27.9 percent year-on-year and exceeded 2.38 million units. Vehicle production rose 21.1 percent year-on-year to more than 2.33 million units, while exports rose 58.7 percent to 389,000 units. For the first five months of 2023, vehicle sales and production were 10.62 million and 10.69 million units, respectively. Both are 11.1 percent higher than last year. Nearly 1.76 million vehicles were exported in the first five months of 2023, an 81.5 percent year-over-year increase.

According to the association, as a leader in the consumption and production of new energy vehicles, China has continued to take measures to support the development of new energy vehicle market, especially in large agricultural areas of the country. Sales of new energy vehicles in May rose 60.2 percent year on year to 717,000 units, and production of these vehicles equaled 713,000 units, up 53 percent from May 2022.

The market share of new-energy vehicles in China reached 30.1 percent in May.

Based on this data, the Chinese news portal Sina reports that in the first quarter of 2023, China ranked first in auto exports, surpassing the world's leading exporters, Japan and Germany. In January-March of this year, a total of 1.069 million cars were exported from China, which is about 22,000 more than from Japan. The main buyers of Chinese automakers' products were Mexico, Great Britain, Belgium, Japan, USA, Australia, Germany, United Arab Emirates, South Korea and Russia.

The leader in exports among Chinese automakers was SAIC Motor, which shipped to foreign markets in the first quarter 313 thousand cars. The stake of Chery Automobile had 244 thousand cars, and the third place was occupied by Chinese subdivision of American Tesla (128 thousand). Further in the list of the largest exporting companies Changan, Geely, Great Wall, Dongfeng, JAC, BYD and BAIC.

But 40 years ago, China did not have its own auto industry. The cars for officials and trucks were produced in limited quantities in factories built in China by specialists from the Soviet Union. However, by the beginning of the 21st century a powerful automobile industry had been created, which produces more cars than any other country in the world. Nowadays China produces all components for automobiles and is able to design any type of modern vehicles.

Between 2010 and 2020, the annual volume of Chinese car exports hovered around 1 million, with more than 20 million cars produced domestically. A sharp increase occurred in the last three years, when deliveries abroad tripled. In 2022, export from China was 3.11 million cars, of which 679 thousand are cars that run on new energy sources. According to the forecasts of the China Passenger Car Association, by the end of 2023, the export figure will reach 4 million, which will mean that China will firmly take the first place in the world in terms of car production (23-24 million) and exports.

According to Bloomberg, the U.S. missed the explosive growth of Chinese exports. They didn't expect a new leader to emerge so quickly on the global auto market. But this is only the beginning. According to Xu Hai Dong, assistant chief engineer of the China Association of Automotive Manufacturers, China has set a goal of selling eight million passenger cars abroad by 2030. That's double today's volume of Japanese shipments.

Chinese brands or other brands, but made in China, already dominate the markets in Latin America. They are successfully sold in Europe and compete with leading European manufacturers, whose plants, by the way, are also located in China. According to Goldman Sachs Group Inc., car factories in China have the highest level of robotization in the world. As a result, the quality of products has improved. Over the past decade, Chinese cars have begun to successfully pass European safety tests. China's severe restrictions on air pollution have helped it reach European emission standards.

According to Eurostat, in 2021, a crucial year for Chinese-made cars, exports to the EU increased by 156%, to 435,000 units. In this regard, Europe is extremely concerned about competition from Chinese automakers. Because of fears that the Chinese will displace European brands, Europe is talking about introducing barrier duties on Chinese cars.

BYD, which now makes only hybrids and electric cars, has become the world's largest manufacturer of these vehicles, surpassing Tesla. Its products are storming not only the European, but also American markets. In terms of price-quality ratio, Chinese cars powered by new energy sources are superior to local competitors. The same is true for Chinese cars with internal combustion engines.

According to Western automobile associations, the average price of a Chinese-made car sold abroad in 2021 was about $13,700, which is three times less than the price of a German car and about 30% less than the price of a Japanese car. In other words, China was conquering car markets by offering mostly high-quality but inexpensive cars. But now it is beginning to export premium and luxury cars. Such as the famous cars from the Red Banner factory, the Chinese Rolls-Royce, as well as Nio, XPeng, Zeekr and others, which are an order of magnitude superior to Western cars in terms of technology and design. This is a real masterpiece of design thought. By the way, they have already appeared on the Russian market. True, their prices are a bit steep.

The Chinese are pragmatists; they take advantage of the situation on the Russian market, where with the departure of Western companies there is virtually no competition, and prices are inflated by Russian dealers.

But as the market becomes saturated, the situation will change, and Russian consumers will be able to fully experience what the real Chinese car industry is all about. Fans of cars from the Celestial Empire believe that it has long been in no way inferior to the acknowledged world leaders. And even surpasses them.