Globally, Chinese Cars have never been the go-to when deciding which new or second hand car to purchase. Usually, we think about manufacturers from Japan, Germany, America, France or Italy. However, there are over 2 billion people living in China so surely they are buying local Chinese cars. Will Chinese car companies start to export on a bigger scale or just stay domestic? It’s an interesting space right now to be watching.
Chinese Car Manufacturers and Brands
- Shanghai General Motors
Over the past year, companies like Geely are coming to dominate global automotive manufacturing. By 2020, China will have produced nearly nine million cars and light trucks, about one fifth of total global production. And, by 2030, we project that nearly half of global car production capacity will reside in China.
Among the major car-makers, these numbers count China far more as an importer than as a source of export. In 2018, Ford, Nissan, and Mazda made just 542,000 cars in China; Nissan built 62,000 in the U.S., where it is the No. 3 carmaker; General Motors took a loss, selling just 49,000 cars in China. To be fair, the China-based Dongfeng Motor Group has accounted for much of the rise in global production. But there are three areas in which more, not fewer, Chinese cars are finding their way overseas: cars for commercial vehicles, SUVs, and luxury goods.
Dongfeng, backed by a Chinese government that gives favorable treatment to foreign automakers, makes these vehicles, especially large SUVs, in collaboration with Mazda. But since Beijing is pushing electric cars, in part as a response to the environmental impact of air pollution, that market is about to be crowded out of the U.S. market entirely. Instead, though, long-distance trucks, the stuff of local economies, are being converted to run on hydrogen fuel cells and later electric power. Imagine that when a large HGV lorry can run on electrical power for hundreds of kilometers.
The attractiveness of fuel-cell vehicles for truck operators is that it leads to greater on-road efficiency, lower maintenance, and reduces emissions. The trend toward electrification has, as we expected, hit the SUV segment. Chinese carmakers are making many of the cars, which are predominantly built in the southern factory complex of Guangzhou.
Currently, 30 percent of the segment’s volume is imported, with notable examples from both Nissan and Toyota, and it appears this trend may continue as the market transitions from small sedans to medium and large SUVs, and as more of China’s population becomes eligible for private ownership in five to 10 years.
Still, the emergence of Chinese car brands as strong competitors in the U.S. market has boosted Ford shares, which are up 33 percent since last July. Luxury goods in China have already taken 30 percent of the entire world’s luxury goods market, far more than the 12 percent that the U.S. has, this isn’t necessarily studying cars though.
Chinese auto dealers have set a record for vehicle sales; the Chinese middle class is expected to become the largest in the world in three years. And in Chinese carmakers presence in the American market, not just in the old city of Detroit, are signs of Chinese influence.
Summary of Chinese Carmakers
It’s not completely clear what market share Chinese cars will bring into markets like the U.S., United Kingdom and the rest of Europe. But there is one thing for sure and that is the amount of Chinese cars being sold in China is constantly rising. This will no doubt continue over the years with the Chinese rich to poor pay gap being smaller, meaning that a middle class China will be purchasing these cars. And, who knows maybe the majority of these cars will be electric-powered or even hydrogen. With the population the size of China’s the world can only hope that they start to look at their environmental footprint that is caused by car emissions.