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European volume car manufacturers under pressure from Chinese OEMs?

Europe versus China car manufacturer history infographic


 

Traditional heritage mass-market passenger car manufacturers appear most exposed to a new influx of Chinese brands, such as SAIC's MG, going after incumbents' market share in an aggressive cutthroat, high-volume, low-margin segment, but first signs suggest that this battle is far from over with no signs of capitulation on the horizon just yet, with the likes of Renault laying down its intentions with some key product launches at this year's Geneva Motor Show beginning today.


The likes of Ford and Opel/Vauxhall witnessed their annual West European passenger car market share reduce from double-digit levels within the past 25 years, thanks to the predatory premium push from the likes of BMW, Audi and Mercedes introducing new lower-segment models and putting volume ahead of margins to create scale which began towards the end of the 1990s, resulting in traditional mass-market volume manufacturers surrendering market share to the more upmarket compact models such as Audi's A3 introduced in 1996. 


While those stormy seas were just about calming and German premium manufacturers, which now control every fifth new car coming onto the market compared to just half that (9%) in 1990 according to Schmidt Automotive Research data and appear to be meandering back to a margin-over-volume strategy once again, confidence and brand image was returning for the likes of Ford, Renault, Peugeot and co. 


New storm warning has been issued 


Not even being a blip on the European industry radar just five years ago, with just 0.1 per cent market share of the West European new car market, or combined volumes of just 71,500 units in pre-COVID 2019, Chinese manufacturers controlled three per cent of the region's market at the end of 2023, soaking up 345,100 new regional passenger cars across all fuels.


However, according to our latest data, Chinese manufacturers are losing momentum.


In what appeared to be an initial strong push and strong momentum at the start of the year, with Q2 volumes up by 30% over the year's opening quarter, Q4 2023 saw growth over Q3 rise by just 4.7% to 94,600 units. 


Latest January 2024 data shows that their regional market share fell back to just 2.7%, or 24,200 units, or their lowest monthly penetration share in 10 months. 


With Chinese manufacturers being most exposed to the current extended 10-14 day shipping times from China to Europe due to the longer route being taken around South Africa rather than through the Suez Canal due to geopolitical tensions in the region, this could have shifted some of January's volumes into February however. 


Logistical challenges were already tough for shipments given the lack of pure car truck carrier vessels (PCTC) which also had the negative consequence of record charter prices reaching $120,000 per day or a six-fold increase over the pre-Covid period. 


Many older PCTCs were scrapped during the slow market COVID period and record replacement orders were delayed due to COVID shutdowns at shipping yards.


However, as those orders for new vessels begin to enter service, with BYD launching a new 7,000 capacity carrier in January and arriving in Europe at the end of February following a 40-day journey, it will take more of an armada to make a real dent, assuming customer demand is present in Europe. With new PCTC vessels entering service in what almost appears to be on a fortnightly basis since the turn of the year, which should positively impact pricing downwards, this battle is not only far from won, this is just the first round of many.

 

A knock-out blow from either side still appears a long way off, with 2027 ringing in the production start of BYD's first European production site in Hungary, aiming to avoid increasing protectionist headwinds both from independent nations and collectively across all 27 EU member states.

 

The real battle is likely to heat up towards the end of the decade when we can possibly expect more consolidation to strengthen both sides in the shadows of strengthened CO2 legislation from 2030.  


Grab your popcorn! 

Continues for subscribers...

The 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 a double page in-depth look at the Chinese OEMs as their European expansion slowly begins.



 
 

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

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