Rise and fall of foreign auto’s in China

A limited-edition Audi R8 V10 on display at the Chengdu 2021 auto show. Photo: VCG

Hello, greetings from Shunyi for Thursday 21st September. Last week we looked at European Auto Brand History in China which focused briefly on the rise of the motor car in China and the foreign brands driving it. This article looks at where things may be now in this bloody, vicious battleground and bitterly competitive market.

Last week we discussed how a couple of European brands developed their China market from winning taxi and Government bids for automobile supply. As China opened up and wealth began to trickle down to the rapidly expanding middle class, owning a motor car became one of the “success symbols” in China.

There were several domestic, independent brands carving themselves a reputation. But for the majority of Chinese buyers looking to impress, foreign brands made in China under a JV license were the primary choice. Again, we can think of VW, Nissan, Toyota, Hyundai as early ground breakers. Some of the original European brands, such as Peugeot and Citroen failed to capitalise on their good start, largely because of the problems with the PSA Group and more recently Stellantis. However, as we have reported, both brands are reentering China in attack mode.

So, from the get go, European and Asian brands held up the foreign end but as the market developed Chevrolet and Buick in particular found popularity. Ford and Jeep also entered the China market, as did UK (Indian) brands such as Jaguar and Land Rover. Meanwhile the now successful local bandstands, such as Geely and SAIC went shopping and bought up the likes of Rover, MG and Volvo.

However circa 2017 the crazy never ending growth in the China auto market seemed to peak. Sales figures fell for the first time in 2018. Many expected this to be a resetting blip with business as usual soon. Alas, they did not anticipate 2019 and Covid. Some of the causalities around this time included Suzuki who exited the Chinese market. Followed shortly by Peugeot and Citroen when their Chinese partner pulled out. Most brands reported falls in sales but most spectacular perhaps was the hither too darling and high flyer Jeep which was hit with a deluge of quality problems. End of last month Jeep announced the closure of one of their two assembly plants in China.

Initially some commentators pointed the finger at NEV vehicles which were slowly but steady eating into the mass market. As most of these were home grown it was inevitable that overseas brand’s sales would suffer. There may be some logic to that. But there was also the same Apple V/S Huawei mentality; ie Chinese consumers were deliberately shunning foreign brands, US in particular to display their annoyance at the new US policy against China.

In some ways this is a form of  anthropomorphism – applying human logic to animal actions. In other,words, trying to apply western culture thinking to Asian behaviour. Despite both being human, there are definite and distinctive differences in the way each thinks and reacts. Chinese consumers tend to be rather pragmatic and can separate the political nuances from a product. Nor are they as brainwashed or unaware of global affairs as many would like to believe.

As we and many others have pointed out, Apple lost sales simply because Huawei was better value for money. Claims of Chinese nationalist pride impacting sales can’t hold water when consumers flocked to Huawei globally. Problems arise however when brands are perceived to insult Asian culture, either innocently or knowingly. Then you can expect some fairly severe push back, as Dolce Gabana learnt.

So perhaps the decline in foreign brands share of the China auto market was a mix of circumstances. Very attractive Gvt subsidies on EV and a natural levelling followed by Covid. However, it can’t be ruled out that maybe a certain amount of arrogance was also at play here coupled with a gross underestimation of how fast the native China EV market would grow.

The decline in auto sales has not been helped by the global shortage of computer chips – although that impacts negatively on China build brands also. This article, courtesy of Caixin Global may not be music to their ears either: China’s Monthly NEV Sales Surpass 320,000 for First Time

We will leave you with some images of the Chengdu Motor Show 2021. Over 120 domestic and foreign automobile brands with some 1,600 vehicles attending.

https://aim2dchinabusinessnews.wordpress.com/2021/07/10/chengdu-a-good-china-business-choice/

Thanks for reading our China news, marketing, tech and social media article – we hope it was useful, relative, informative, valuable.

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Whatever your question re Chinese Business, Marketing Tech or Social Media, she will know the answer, or know someone who does! A brief intro below;

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In 2003 Everlyne Yu co-founded WPBeijing Marketing Studio with Englishman Peter Bic, now known as Bic Brands.

She began Uengager, a company focused on customer engagement, as a SaaS MarTech company in 2017.

Hello, Nihao, I’m Everlyne

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Everlyne is also a key note speaker, lecturer and KOL on MarTech in China. She is CEO of Uengager, business development officer for Bicyu.

Everlyne hs been privileged to work with a variety of international organisations, from VW, Cushman Wakefield, Sodexo, Bristol Myers Squibb to local Chinese firms such as Midea, and OK Order.

If you’re looking for guidance, tips, advice on any aspect of starting or growing a business in China or training, coaching your existing China marketing team for excellence, be sure to check out Uengager. Home page and base for Everlyne Yu. Read her short bio – opposite left – or contact her direct – below – for a free, heart to heart chat.

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Published by The Bic

Bicyu is a NZ registered, British owned MarTech business based in Beijing providing marketing, tech, education and information services to European, NZ, Australian, UK, African, and Asian firms doing business in China. We work with local ones too. We've been here doing this since 2003. We also incorporate Aim2D and Uengager in our small brand list.

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