The automotive industry is witnessing a significant shift as Chinese automakers are poised to rapidly expand outside of their home country. According to a new report by AlixPartners, Chinese automakers are expected to achieve 33% of global automotive market share by the year 2030, up from 21% this year. This growth is projected to come primarily from markets outside of China, with sales expected to triple from 3 million vehicles to 9 million vehicles by the end of the decade.
The rapid expansion of Chinese automakers is raising concerns among legacy automakers and politicians globally. Many fear that the influx of less expensive, China-made vehicles will flood the market and undercut domestic-produced models, particularly in the all-electric vehicle segment. Furthermore, challenges such as stricter safety standards in markets like Japan and North America, as well as import tariffs on Chinese electric vehicles in the United States, are expected to limit the growth of Chinese brands in these regions.
Mark Wakefield, global co-leader of the automotive and industrial practice at AlixPartners, describes China as the industry’s new disruptor. Chinese automakers are capable of creating vehicles that are not only faster to market and cheaper to buy, but also advanced in technology and design, and more efficient to build. This disruptive force is pushing legacy automakers to rethink their strategies and adapt to the changing landscape of the automotive industry.
In North America, Chinese automakers are forecasted to achieve a modest 3% market share, primarily in Mexico. However, in regions such as Central and South America, Southeast Asia, the Middle East, and Africa, the market share of Chinese automakers is expected to grow exponentially. Even in Europe, where Chinese automakers have made significant strides in recent years, market share is projected to double from 6% to 12% by 2030.
The success of Chinese automakers can be attributed to several factors, including cost advantages, localized production strategies, and highly tech-enabled vehicles that cater to evolving consumer preferences. Chinese EV automakers, in particular, are able to bring new products to market in half the time compared to legacy automakers, thanks to their focus on meeting standards efficiently rather than overengineering. Additionally, Chinese automakers benefit from a 35% cost advantage for vehicles made in China.
To remain competitive in the face of growing Chinese automakers, traditional automakers must redefine their business development processes and accelerate the pace of vehicle development. Andrew Bergbaum, global co-leader of the automotive and industrial practice at AlixPartners, warns that automakers sticking to business-as-usual practices are at risk of becoming obsolete in the rapidly evolving automotive landscape. Wakefield emphasizes the need for legacy automakers to rethink their strategies in order to effectively compete with the innovative force of Chinese automakers in the global market.
The rise of Chinese automakers in the global automotive market presents both opportunities and challenges for the industry. As Chinese brands continue to expand their presence worldwide, legacy automakers must adapt and innovate to stay relevant and competitive in this rapidly changing landscape.
Leave a Reply