China exports 800 000 NEVs in first half of 2023

China exported 2,34 million vehicles in the first half of the year, up 73% from last year, according to data released Thursday by the China Passenger Car Association (CPCA). Exports of new energy vehicles (NEVs) in the first half of the year amounted to 800 000 units, up 105% year-on-year, accounting for 34% of all vehicle exports. 770 000 of them were passenger cars (+113%).

As long as there is steady international demand, there will be plenty of room for China’s auto exports to grow in the future, the CPCA stated. In June, China exported 409 800 vehicles, up 61% year-on-year but down 6% from 438 000 units in May. According to the CPCA, NEVs exported amounted to 124000 units in June, up 91% year-on-year.

Europe and South East Asia

China’s NEVs have mainly been exported to Western European and South East Asian markets, with Belgium, Spain, Slovenia, and the United Kingdom becoming major destinations in the past two years, the CPCA indicated.

This year, China’s NEV exports to South East Asian countries such as Thailand have also increased, the CPCA said, adding that NEV models from SAIC and BYD have performed brightly.

VW Group in China

As the flow of Chinese cars into the EU market increases, European manufacturers in China are encountering difficult times. Especially German car manufacturers, for whom the Chinese market is already the biggest in the world, suffer from dwindling sales.

The Volkswagen Group, for example, was the most important manufacturer in China for a long time but was overtaken by BYD last year. The Group realized a rise in turnover of 15% last year, but this was due to good sales in Europe and North America. In China, sales decreased by 1,2%, while the Chinese market represents 40% of VW’s total sales.

Consequently, VW Group has revised its worldwide sales forecast for 2023 from 9,5 million to something between 9 and 9,5 million. China is responsible for almost half of the profit the VW Group generates.

The heel of Achilles is the sales of BEVs by the VW Group in China. While its main competitor BYD sold more than half a million electric vehicles in China in H1 of 2023, VW only sold 38 000, according to the German newspaper Handelsblatt. The market share of VW in China in the electric segment decreased from 3,5 to 2,4%.

Hence the move of VW to enter a joint venture with Xpeng and the plans for collaboration between Audi and SAIC on new electric platforms and other developments. The Germans now admit they have underestimated the pace of the Chinese carmakers implementing electrification and the wishes of the Chinese customer for infotainment and driving aids in a car.

VW’s shareholders aren’t convinced, and the share value has decreased by 8% since CEO Oliver Blume took the helm of the company. Although Volkswagen increased its turnover by 15% last year and its profit by 25%, the operating margin of only 7% worries the shareholders, certainly compared to other manufacturers’ operating margins.

Mercedes, for example, scores 13,5% and Stellantis 14,4%. Even Renault is climbing out of the pit with 7,6%. The value of the Mercedes-Benz and BMW shares in the same period rose by 28% and 43%, respectively.

Mercedes

Despite the excellent figures overall, Mercedes-Benz is also suffering in China. For the German premium manufacturer, China represents 20% of its sales. In the second quarter of 2023, these sales have fallen some 9% in China, whereas they augmented in the rest of the world.

Where the VW Group is searching to enhance its collaborations with its Chinese partners, Mercedes-Benz prefers to stay on its own. Mercedes CEO Ola Källenius wants to rely on his own strengths in China.

“Digitalization and drive are important, but this alone does not make a Mercedes, Kallenius said to the German magazine Automobilwoche. “We, therefore, want to retain control over technical development. These tasks are up to us; we will not work with another manufacturer,” he added.

The Chinese challenge

According to the French automotive analyst AlixPartners, Chinese manufacturers could provide 51% of the car demand in their country in 2023, climbing to 65% in 2030. “While everyone is looking at Tesla, it’s time to prepare for the Chinese competition,” the analyst says.

Luca de Meo, CEO of the Renault Group, commented on this yesterday: “Two years ago, everybody said it was a problem not being present in China; now we see that some competitors face big problems over there.”

Renault has encountered multiple difficulties these last years in China and has almost withdrawn from the market, except for selling electric LCVs and the small electric car KZE, known as the Dacia Spring in Europe. The latter is also produced over there for all markets.

For its Horse part of the business (development of ICE and hybrid powertrains), Renault has also partnered with the Chinese manufacturing group Geely, and there are plans with Dongfeng. In the end, everybody will have to deal with the Chinese; the question is how important their influence will be in the future.