Chinese brands hit by logistical challenges while high proportion of rental fleets soak up arrivals

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LATEST STUDY EDITORIAL PREVIEW

With European alarms sounding and a media storm writing about "Chinese OEMs about to dig European manufacturer auto graves", with the threat of "affordable" electric models increasingly arriving in Europe, that narrative may be about to hit cold water – if temporarily. Strong maritime headwinds are creating rougher seas than initially expected for Sino manufacturers shipping vehicles to Europe in dedicated PCTC (pure car truck carriers) where daily charter prices have risen to record highs of over $120,000, and that's before crew, fuel and port costs.

The perfect Covid storm saw many older PCTC roll-on roll-off (RoRo) vessels, dedicated to shipping vehicles, scrapped when vehicle demand sunk to recent historic depths, and shipping companies saw their opportunity to limit supply and keep prices as high as possible. It has now caused a major headache for auto companies that rely on these ships.

Despite record orders for new vessels, these aren't likely to come online for at least another two years as vehicle demand returns faster than anticipated. 750 PCTC vessels are currently available worldwide, or 20 fewer than before COVID, according to the Ministry of Oceans and Fisheries.

China is starting to become a significant player for global exports with almost 0.6 million new passenger cars expected to be shipped from China to W-Europe alone this year including Western brands.

Pre-Covid, China's auto industry was almost entirely domestically orientated, with few exports. However, Sino OEMs are now looking to expand to Europe – the world's second-largest EV market – with BEV models thanks to their early advantage EV competencies built up domestically.

Currently, they are entirely exposed to sea freight with no European production plants in place.

BYD are likely to confirm a Hungarian facility later this month.

Although the Chinese market entrance to Western Europe got off to an impressive start from an electric vehicles perspective, accounting for 8.4% of the new BEV passenger car market on a 12-month rolling basis up to October 2023, equivalent to 170,427 units, or 138,300 units so far this year, the pace of growth is already showing the first indications of slowing.

CONTINUES HERE FOR SUBSCRIBERS More detail in the monthly European Electric Car Study published by Schmidt Automotive Research each month and is available to purchase as a single edition or an annual subscription.

The study now also features an in-depth look at the Chinese OEMs as their European expansion slowly begins. Are Chinese OEMs really a threat to the established European OEMs and what does the outlook look like?

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*Western Europe 18 Markets: EU Member States prior to the 2004 enlargement plus EFTA markets Norway, Switzerland, Iceland, plus UK