AlixPartners: ‘One in three cars sold worldwide in 2030 will be Chinese’

In 2030, one in three cars sold worldwide will be Chinese, compared to one in five today. Chinese brands are well underway to catch 33% of the global car market by then, according to a study by financial advisory and international consulting firm AlixPartners.

“The 21st edition of the AlixPartners Global Automotive Outlook finds 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 worldwide, selling 9 million units outside China,” the consulting firm says.

Rude awakening

“Automakers expecting to continue operating under business-as-usual principles are in for more than just a rude awakening – they are headed for obsolescence,” Andrew Bergbaum, global co-leader of automotive at AlixPartners, said. “The revolution taking place in the global auto industry is driven by the incredible and once unthinkable maturation of Chinese automakers that do several things differently.”

The company’s specialists say the global auto industry has been shaped by several inflection points over the past half-century, starting with Japanese production techniques in the 1970s, then the rise of the Koreans, and the more recent disruption caused by Tesla.

China is the new disruptor

“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,” Mark Wakefield of AlixPartners adds. “For traditional OEMs, keeping pace with China’s strongest brands will require more than a course correction.”

The report says Chinese growth will be built on cost advantages, localized production strategies that will enable a build-where-you-sell strategy in non-China markets, and highly tech-enabled vehicles that meet evolving consumer preferences for design and freshness.

Faster development

So what has given the Chinese, who have come from virtually nowhere, an edge over the world’s traditional car manufacturers these last few decades?

Faster development and ‘fresher showrooms, ‘ for instance. The Chinese create new products in half the time—40 months vs. 20 months—”mainly by designing and testing to sufficiently meet standards versus overengineering.”

Chinese brands enjoy a 35% cost advantage due to lower labor costs and higher vertical integration from raw materials to component suppliers to final assembly to selling to other automakers.

Transparent customer experience

“Many Chinese automakers use 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.”

Finally, AlixPaterns points out, “Supplier-OEM profit equation that is flipped: Globally, automotive suppliers are reporting an average 10.6% operating margin, trailing OEMs by nearly two percentage points, the analysis shows. In China, where OEMs focus more on near-term market share growth, the 10.4% supplier margin outpaces OEMs by 3.3 percentage points.”

Sales forecasts

The Automotive Outlook also points to several sales forecasts, with Europe seeing a growth of 2% in 2024 and tracking marginal growth of roughly 1% through 2027, led by Eastern Europe. US Sales will increase by 3% in 2024, ‘juiced’ by a resurgent interest in PHEVs. This will result in 5% of sales of ICE cars by 2030 and 41% of ‘New Energy Vehicles’ (NEV), meaning BEVs and PHEVs.

China’s sales will grow by a relatively modest 4.7% in 2024 to 26.7 million vehicles. That number will exceed 32 million by 2030, 70% of which will be sold by Chinese brands. NEV sales will surge 32% globally in 2024. NEV’s share is to reach 45% by 2030.