In 2023, China's automobile production and sales totaled 30.161 million and 30.94 million, an increase of 11.6% and 12% respectively, and the production and sales reached a record high. While China's auto production and sales hit a new high, auto export data are also very bright. According to data released by the General Administration of Customs, China exported 5.221 million vehicles in 2023, an increase of 57.4% year-on-year.
The Alliance for American Manufacturing has called on the U.S. government to block imports of low-cost Chinese cars and parts from Mexico and "close the commercial back door to Chinese auto imports before they lead to mass factory closures and job losses in the United States." It ended up killing the American auto industry. At the same time, Europe has also announced an anti-subsidy investigation into Chinese-made pure electric vehicles. The European Commission's investigation documents show that the anti-subsidy investigation into Chinese-made electric vehicles is currently in the "start-up phase" of the investigation, and a verification visit will be conducted before April 11. European Commission investigators will visit BYD, Geely and SAIC, according to people familiar with the matter. It should be known that Mexico, Belgium, the United Kingdom and Spain are the top ten countries for Chinese auto exports in 2023, which undoubtedly casts a shadow on the road of Chinese cars out of the sea.
The move is seen as a new auto manufacturing force seeking to upend the established local auto industry with cost advantages, reviving memories of a similar situation about 40 years ago, when highly cost-effective Japanese brands such as Toyota and Nissan, oversupplied in Japan, sought new customers in overseas markets such as Europe and the United States. Finally, in the face of the Japanese car companies, the United Kingdom, France, Italy and Spain and other European countries implemented an import quota system for Japanese car companies. In 1991, Italy set a quota for the direct import of Japanese cars of only 4,500, while Spain only 1,200. With the establishment of the European Union, the European Community and Japan reached an agreement to continue the import quota system. Faced with potentially similar obstacles, Chinese brands such as BYD, MG and Great Wall Motor are now considering the next step - setting up local production. "When you're selling 200,000 cars a year locally, it's better to build production locally," William Wang, MG's head of UK and Europe, said in an interview with foreign media earlier last year. David Bailey, professor of business economics at Birmingham Business School in the UK, said the cost of making a car in China was about 20 to 25 per cent lower than in Europe. "Chinese car companies have such a huge cost advantage, even more than Japanese car companies, why would they set up production in Europe?"
One reason, says Andy Palmer, a former Nissan and Aston Martin executive, is that grabbing market share in Europe by exporting cars made entirely from China's local supply chain would alarm lawmakers protecting European industry. "They will impose tariffs and non-tariff restrictions. They're going to price you out of the market, and they're going to do that with local component content requirements and carbon footprint rules for vehicles." He also pointed out that localizing production has other benefits besides avoiding tariffs. "If you have some form of R&D or design centre, localised production capacity, some form of engineering capacity, you can make better cars, cars that are more attractive to European customers because you have a better understanding of the local situation." "Local production means you work with local people. It's a bigger commitment." However, Wang did not disclose the timing or location of MG production in Europe. However, MG's Wang also pointed out that while establishing production bases in Europe helps Chinese automakers avoid tariffs, it also costs more compared to China.
Chinese car companies going to sea, whether it is exporting or building factories, can not completely rely on their own "fight alone". Through cooperation with foreign parts companies, Chinese car companies can better adapt to the international market demand, enhance competitiveness and achieve the goal of going to sea development with the help of their technology, market and resource advantages. As a good helper of car companies, some foreign parts manufacturers have already begun to lay out and "sail" for Chinese car companies. Peng Junhu, vice president of Magna Steyer China, said in an interview with Geste Automobile, "In the context of Chinese car companies going to sea, foreign parts companies should find a correct positioning, for the needs of Chinese customers going to sea, to develop a new strategy, the goal is to effectively provide the resources of foreign enterprises in the world to Chinese customers in the way and speed they are accustomed to, and effectively provide customers with the resources." To satisfy Chinese carmakers." Some foreign parts companies already have a high visibility and reputation in the international market, and cooperation with them can enhance the brand image and recognition of Chinese car companies, and increase the market competitiveness of products. In addition, they have broader channels and resources in the international market, which can help Chinese car companies enter new markets, find partners and customers, and expand overseas sales.
At present, BYD, Nezha, SAIC and other Chinese car companies have announced the establishment of factories in Thailand. Zf previously revealed in an interview with Geste Automobile that the company has traveled to Thailand to meet with a number of Chinese vehicle companies that have set up or will set up factories and research and development centers in Thailand. As a global "century-old enterprise", ZF said that the company has a stable foothold in the Asia-Pacific market outside China, with a number of locations in Japan, South Korea, Malaysia, Singapore, Thailand and other regions, and has also established a good customer partnership. In addition to market expansion and brand building, foreign component manufacturers can also provide support in terms of technology. Foreign parts manufacturers usually have advanced technology and experience, and can provide technical support for Chinese auto companies to help them improve product quality and performance, and even meet local market regulations, so as to meet international market demand. As the industry leader in advanced driver assistance systems and autonomous driving solutions, Mobileye emphasized in an interview with Geste Automotive that it has long-term vision advantages in the industry and long-term accumulation in various countries, which can better support commercial vehicle manufacturers to go to sea. In particular, the regulations of the GSR will be upgraded after July 2024.
Regulation (EU) 2019/2144 was issued in 2019 with the aim of improving road safety. In issuing the regulation, the EU noted that the number of road casualties has been greatly reduced over the past few decades due to the development of vehicle safety, yet 25,000 people were still killed on EU roads in 2017 - a figure that has remained unchanged for four years. In order to reduce the number of road casualties, the European Union has added a number of Safety technical requirements to the new General Safety Regulation (GSR), which requires all vehicle registrations in the EU to comply with the new GSR from July 2024. It is reported that the Mobileye fisheye solution can provide ECE R130, R131, R151, R159 and ISA functions for commercial vehicle manufacturers to comply with the requirements, which is enough to protect the work of commercial vehicles going to Europe. It is not difficult to see that international component manufacturers can quickly respond to local market regulations and provide products that meet the requirements. Some foreign parts manufacturers have already laid out for China's sea layout and done a good job of supporting the corresponding work, but Chinese parts companies are not willing to lag behind. Chinese battery manufacturers occupy a dominant position in the global power battery market, and many Chinese battery manufacturers have opened overseas production capacity layout, not only to meet the needs of international car companies, on the other hand, can help Chinese car companies go to sea. If combined with the past few years, China's power battery enterprises have been open to the sea layout planning, according to the incomplete statistics of Gesti Automobile, as of June last year, there have been more than 575GWh overseas planning capacity.
As the Top 10 enterprises in the global power battery market, Xinwang Da is also actively laying out for Chinese car companies. In an interview with Geste Automotive, Xinwanda pointed out that in addition to the power battery solutions in line with different market and export needs and the gradual layout of overseas bases, Xinwanda has also set up a number of technical centers and customer centers in many countries and regions. What is more rare is that Xinwang Da also stressed the construction of sustainable development and carbon footprint standards. As Andy Palmer, a former Nissan and Aston Martin executive, points out, European lawmakers are likely to set rules on carbon footprints in order to protect local industries and advance emission reduction targets. The EU battery regulation, which aims to promote the sustainability of batteries throughout their life cycle, adds to a growing body of legislation on supply chain compliance. The EU battery regulation introduces harmonised rules on safety, sustainability and labelling requirements, limits the use of hazardous substances such as mercury and cadmium, and requires disclosure of the carbon footprint of batteries. Labels need to provide information about components, battery life, and recyclable ingredients. In addition, the label needs to provide a digital product passport and a QR code that can be linked to the battery's composition information.
Xin Wang Da stressed that "efforts are being made to accelerate the construction of a power battery carbon footprint standard system, and docking with the international community in advance to achieve mutual recognition." At the same time, we will comprehensively build a key upstream raw material supply system that meets the requirements of the bill and is competitive, and escort China's new energy vehicle enterprises to the sea in an all-round manner." The move shows that Xinwanda is actively integrating with the international market. In the context of the "great era of navigation" opened by Chinese car companies, domestic and foreign parts manufacturers are trying to seize this growth opportunity. The rapid layout of the global market demand, global thinking, localized action is the key to the success of parts manufacturers in this trend. Parts manufacturers should take active action to seek market opportunities in the wave of Chinese car companies going to sea, form a first-mover advantage, and develop together with Chinese customers to achieve success.
