Chinese car companies going global: where do they sell to? Who made a fortune?
Wen | Dingjiao Dawn
Editor | Wei Jia
Last year, China sold a total of 30.09 million cars, of which 4.91 million were sold overseas. If we include used cars, the number overseas would be 310000 more.
This has enabled China to surpass Japan and become the largest exporter of automobiles.
In the first three months of this year, China sold 6.72 million new cars, of which 1.32 million were exported. Compared to the same period last year, the total volume increased by 11%, while exports increased by 33%.
This data can be considered explosive. Cars produced in China are accelerating their transportation to various parts of the world, including Russia, Mexico, Belgium, Thailand... In some countries, cars imported from China even account for more than half of sales.
BYD, Great Wall, Chery and other car companies have formulated ambitious plans to go global. BYD has even built its first roll on/roll off ship, with plans to increase it to 8 in the future. Last year, half of Chery's sales of 1.88 million vehicles were exported. NIO and Xiaopeng have entered the European market, while Nezha Motors has entered Southeast Asia.
We know that domestic car manufacturing is very popular, and Weima is quickly going bankrupt. Xiaomi, which has been rolled up from childhood to adulthood, has added another spark. Ford CEO Jim Fa used the four words "bloody reality" to describe the competition in the Chinese car market. He visited China with the company's CFO in April last year and was greatly shocked by the ongoing price war. The two looked at each other and said, "Oh my goodness.".
So, going abroad has become an important way for Chinese car companies. According to Zeng Qinghong, Chairman of GAC Group, "The current market trend is to move from internal competition to external competition."
This wave of Chinese car exports will continue for some time. Curiously, where have all the Chinese cars exported in large quantities been sold? Which cars sell well overseas? How much growth space is there in the future?
Where did 4.91 million cars go out to sea?
Before discussing specific car companies and brands, we must first understand that cars are the jewel on the crown of industrial manufacturing, and not all countries have the ability to make cars.
Foreign trade involves tariffs and trade protection, and automobiles are also strategic industries. Therefore, where a country's cars can be sold and where they sell well is not only related to the quality of the products.
Based on this understanding, let's take a look at the flow of China's automobile exports.
Data source: China Association of Automobile Manufacturers
This chart can help us establish a holistic understanding, but there are many tricks in the data that need to be further decomposed.
Russia ranks first with 910000 vehicles, accounting for nearly one-fifth of China's total exports, far ahead.
As for the reason, it has something to do with the Russia-Ukraine conflict. After the conflict broke out, multinational car companies handed over approximately 50% of the market. Local Russian brands have eaten up a portion, while the rest are mostly taken over by Chinese car companies. Chery has taken nearly 120000 vehicles, while Great Wall has taken over 100000 vehicles, followed by Geely and Changan. In 2023, six Chinese automotive brands entered the top ten in sales in Russia.
After more than a decade, Russia has once again become the largest export market for Chinese automobiles.
Mexico is the second largest export market for Chinese automobiles. In Latin America, there are three countries that are important to Chinese cars - Mexico, Brazil, and Chile, among which Brazil was once the largest market in Latin America. But in recent years, the number of cars exported from China to Mexico has been increasing, reaching 415000 last year, far exceeding Brazil.
Taking apart the data of 415000 vehicles, we found that only over 100000 vehicles were actually registered and used in Mexico, with the remaining 200000 vehicles flowing to other countries in North America.
Mexico has a unique geographical location and is a neighbor of the United States. There is a North American Free Trade Agreement between the United States, Canada, and Mexico, which eliminates tariffs on many goods. Therefore, exporting goods from Mexico to North America is very cost-effective. So, a large number of multinational car companies built factories in Mexico to bypass tariff barriers for exporting cars to the United States, including Chinese car companies.
Mexico has become a transit point for Chinese car exports to the Americas. Ford CEO Jim Farley once mentioned that "25% of all cars sold in Mexico come from China.".
Therefore, the second place on this export list requires a more comprehensive analysis of the data.
The third place is Belgium, which imported 217000 cars from China in 2023, surpassing all other European countries. Belgium is not a large country with a population of over 11 million. It was previously occupied by the BBA, but suddenly imported so many cars from China. The reason behind this is similar to Mexico, as Belgium is a transit point for Chinese car exports to Europe.
Belgium borders multiple countries such as Germany, France, and the Netherlands, and faces the UK across the sea. Chinese cars entering Europe need to be transported and distributed through Belgian ports. Belgian Consul General in Guangzhou, Pei Weimin, has said that almost all Chinese new energy vehicles entering the European market are imported through Belgian ports.
Another point to note is that "Chinese cars" here refer to cars made in China, not necessarily Chinese brands such as Tesla.
The cars produced by Tesla's Shanghai factory are included in China's export data when shipped from Shanghai to other countries. The first batch of Model 3 made in China in 2020 was shipped from Shanghai to the port of Zebruch in Belgium, and then shipped to various European countries such as Germany, France, Italy, and Switzerland.
Last year, Tesla sold 365000 cars in Europe, with some coming from the Berlin factory in Germany and the rest from the Shanghai factory.
Australia has been importing more and more cars from China in recent years. Australia does not have an automobile manufacturing industry and will not actively initiate trade protection for automobiles. In addition, Australia has signed a free trade agreement with China, exempting Chinese cars from tariffs starting from 2019. Chinese car companies have therefore increased their layout in Australia.
There are also two major markets - the Middle East and Southeast Asia, which are important destinations for China's automobile exports. Saudi Arabia and the United Arab Emirates, which are relatively friendly to China in terms of trade policies, are both the top ten countries in China's automobile exports. The automotive market in Saudi Arabia has always been dominated by Asian brands, and now the proportion of Chinese brands is increasing. The UAE's sovereign funds have invested in several Chinese car companies. Southeast Asia has attracted a large number of Chinese car companies, and the degree of internal competition is catching up with that of China.
Which car models are the most popular?
China's exports of automobiles include both new energy and gasoline vehicles, with gasoline vehicles dominating.
Among the 4.91 million exported vehicles last year, 3.707 million were gasoline powered vehicles and 1.203 million were new energy vehicles, with a ratio of approximately 3:1. In the first quarter of this year, the total export volume was 1.324 million vehicles, with 307000 new energy vehicles.
We know that China's new energy vehicles have great advantages, and almost all new energy vehicle companies are clamoring to go global. But in fact, in the past two years, the largest increase in export volume has still been in gasoline vehicles.
This situation is determined by the distribution of countries mentioned earlier.
The two countries with the highest exports of Chinese cars, Russia and Mexico, as well as the rapidly growing Middle East region (Saudi Arabia and the United Arab Emirates), mainly buy gasoline cars. Especially in Saudi Arabia, there are very few new energy vehicles. Together, these four countries imported approximately 1.6 million fuel vehicles from China last year, accounting for over 40% of China's total fuel vehicle exports.
When going abroad to these countries, there is no need to compete for electrification and intelligence like new forces in the automotive industry. Just make slight modifications to mature domestic fuel vehicles, combine them with reasonable pricing in the local market, and provide good after-sales service.
Cost performance is the biggest label for Chinese fuel vehicles.
In the Middle East, Chinese fuel cars are known for their affordability. The best-selling SAIC MG5 has a starting price of less than 100000 yuan, far lower than other models in the same level in other countries. Other best-selling Chinese cars are priced around 100000 yuan.
The best-selling sub market in Chile is mid size pickup trucks. The SAIC Maxus T60 in China is very popular locally, with a starting price of less than 160000 yuan, while Japanese cars in the same class are priced above 200000 yuan.
The few Chinese cars that Russians love the most - Haval First Love, Tiggo 7, and Geely Boyue Pro - are all economy models. The best-selling Chinese cars in Mexico, SAIC MG 5, Chery Omoda, and Tiggo 4, are also affordable.
Overall, Chinese fuel vehicles are mainly priced overseas, competing with Japanese and Korean cars in the market. The market is concentrated in countries and regions such as Russia, Latin America, and the Middle East. In Southeast Asia, where Japanese cars dominate, and in Europe, where German cars dominate, Chinese gasoline cars do not have many opportunities.
However, the market that gasoline vehicles cannot enter is an opportunity for China's new energy vehicles. The best-selling regions for new energy vehicles in China over the past year are Europe and Southeast Asia. Among them, the UK, Spain, the Philippines, and Thailand are all the top ten countries for China's automobile exports.
New energy vehicles are an incremental market with opportunities for overtaking on curves. The Chinese market has undergone a brutal internal competition, and brands that survive and can go global generally have a strong competitive advantage overseas. However, at the current stage, Chinese new energy vehicles also rely on cost-effectiveness overseas.
For example, in Germany, SAIC MG4 sells for 180000 yuan. Although it is 60000 yuan more expensive than in China, it is still more than 100000 yuan cheaper than Volkswagen ID.3, which has a similar positioning and is manufactured locally in Germany. Previously, SAIC Volkswagen lowered the price of domestically produced ID.3 in China, which also caused dissatisfaction among German consumers, as German made products sold for over 300000 yuan, while Chinese made products only sold for over 100000 yuan.
When comparing the prices on both sides, the advantages of China's electric vehicle exports are immediately reflected. So much so that a German dealer imported Volkswagen brand electric vehicles from China and tried to profit from the price difference, but was sued by Volkswagen in Germany.
Low production cost is one of the biggest advantages for Chinese electric vehicles going global. The same model, produced in China, even with tariffs and transportation costs added, the price after export is still not expensive. The European Parliament stated in a briefing that the price of electric vehicles in China is 20% lower than similar products in the European Union.
This has led to a phenomenon where some multinational car companies cannot sell their cars locally in China, so they sell them overseas and instead export them from China.
For example, Ford Motor Company adjusted its market strategy in China last year and planned to make Ford China its "export center" business. No longer competing with Chinese car companies, but producing and exporting in China. The CEO of Ford, who was afraid of price wars, mentioned earlier, believed that "China is very important as an export base, and exporting fuel and electric vehicles from China is very profitable."
Based on this background, a portion of China's automobile exports are contributed by foreign automakers such as Tesla and Ford. Excluding this portion of sales, the remaining cars produced by Chinese domestic brands can better represent the influence of Chinese brands.
Car companies compete fiercely in terms of overseas strength
So, which Chinese brands of cars really sell well overseas?
Let's first take a look at the chart compiled by China Association of Automobile Manufacturers:
Data source: China Association of Automobile Manufacturers
SAIC and Chery can be regarded as the two giants of China's automobile market, far ahead of other car companies. After excluding Tesla, the top three domestic players (Geely, Great Wall, BYD) have sold well, and Changan has always been the dominant player.
SAIC sold 1.208 million vehicles overseas last year (1.099 million exported and 109000 locally produced), ranking first. Out of these 1.208 million vehicles, over half were contributed by the MG brand, with 675000 vehicles.
The MG brand is very popular overseas, especially in Europe, ranking among the top three pure electric markets in the UK and Spain. Last year, The MG brand sold 107000 vehicles in the UK, while China exported 214000 vehicles to the UK. The UK ranks as the fifth largest country in China's automobile exports thanks to the MG brand. In addition, in markets such as Thailand, India, and Brazil, The MG brand is also selling well.
However, one thing to note is that, MG is not a native Chinese brand, it was acquired by SAIC from the UK and later launched by Roewe MG (MG) two brand series products. The MG brand had a certain influence in Europe and resumed sales in Europe in 2019.
Besides the MG brand, SAIC's most competitive brand overseas is SAIC GM Wuling, which sold 376000 vehicles last year. Wuling is mainly sold to markets in Southeast Asia, South America, Africa, and other regions, focusing on cost-effectiveness. Its market share in Indonesia is second only to Toyota and Honda.
Chery has performed outstandingly overseas in the past two years, doubling over 900000 vehicles in 2023, and exports have accounted for half of Chery's total sales. From a single brand perspective, Chery is the top exporter of Chinese independent brands.
In the past few years, there have been many voices in China criticizing Chery, and its domestic sales and new energy transformation have begun to lag behind significantly. Who knew that it had quietly opened up a situation overseas.
Chery mainly sells gasoline cars overseas, and the Tiggo series is the main export model, focusing on "large quantity and affordable". Its main export destinations are Russia, Latin America, the Middle East, and other regions. Chery's explosion also benefited from the sales growth in these markets.
Chery's growth momentum is still continuing. In the first quarter of this year, Chery exported 253000 vehicles, surpassing SAIC in ranking first.
Geely and Great Wall have similar company sizes, and there is not much difference in sales overseas.
Geely mainly focuses on emerging markets such as ASEAN, the Middle East, and Africa, and is expanding its presence in Europe and Southeast Asia by acquiring Volvo and Proton. Its pure electric brand, Jike, is entering Europe and the Middle East.
After Great Wall released its "Ecological Going Global" strategy in 2022, its overseas expansion has significantly accelerated, with all five of its major brands achieving overseas expansion. According to the data released by Great Wall, it has entered more than 170 countries and regions worldwide. In the first quarter of this year, sales in the overseas market of Great Wall have accounted for one-third.
It is relatively easy for Chinese car companies to make money overseas, unlike in China where they lose money and make a fuss. For example, Great Wall's gross profit margin for domestic business was 15.5% last year, while it was as high as 26% overseas. Perhaps, the profits of car companies in China are intertwined.
Let's focus on new energy again. The main players in China's new energy vehicle exports are BYD and Tesla.
BYD only sells new energy vehicles, while Tesla only sells pure electricity. Last year, the two exported 252000 and 344000 vehicles respectively from China, accounting for half of the total export volume of new energy vehicles. All the remaining car companies, including new car making forces such as Weixiaoli, together exported 607000 vehicles.
Excluding SAIC's 200000 vehicles, Geely and Great Wall will divide up some of them, leaving only a small share for other car companies. The proportion of new forces such as Wei Xiaoli is very small.
The transformation of new energy in many overseas countries has a gradual transition process, just like in China. It is still traditional car companies that have benefited from the market dividends in the early stages. NIO set sail to Europe with great momentum, building many exhibition halls, but not selling many cars; Xiaopeng is the same, belonging to the category of thunder, heavy rain, and small dots. The two companies combined sold thousands of vehicles overseas last year.
Among the new forces, only Nezha has performed outstandingly, selling 16000 vehicles overseas last year. In Thailand, Nezha's electric vehicle sales are second only to BYD, ranking second.
However, the current low sales of new forces overseas are not because the products are not strong enough, but because the production capacity, channels, and after-sales system have not been established yet. They have just established a foothold in China and it will take some time to go abroad. At least in terms of intelligence, they have almost no rivals when it comes to going global.
An example is that Ideal currently does not have overseas markets, but some car dealers privately export Ideal's cars to Central Asia and the Middle East. Russian tycoons and Middle Eastern tycoons are very fond of the Ideal L9. Last July, over 200 ideal cars were exported in parallel.
As BYD fully promotes its overseas business, it is not ruled out that in the future, China's new energy exports will be dominated by BYD, just like in China.
In the first quarter of this year, BYD exported 99000 vehicles, a 1.3 times increase, while China's total new energy exports during the same period were 307000 vehicles, with BYD contributing nearly one-third, surpassing Tesla. Chinese car companies cannot beat BYD domestically, and they also have to face BYD's artillery fire when going abroad.
epilogue
Looking at the world, there is no country with a car market as competitive as China's. As Chinese cars accelerate their overseas expansion, there are also signs of price wars overseas.
A senior executive from a domestic independent brand said that in just over a year, the Russian market has evolved into a "red ocean", with numerous Chinese car companies competing fiercely, and the level of competition is comparable to that in China.
The situation in Southeast Asia, Latin America, and other regions is also similar. In Thailand, after BYD, Nezha, and Great Wall opened their markets, Aion, Changan, and Xiaopeng followed closely into the market; In Mexico, SAIC and JAC entered the market earlier. After BYD and Great Wall launched new energy vehicles locally last year, Nezha also announced the launch of flagship models; In the United Arab Emirates, BYD and Geely have both entered the market last year, and a group of new Chinese car making forces are eyeing them.
I fought back and forth, but in the end, Chinese car companies only changed their focus. Especially for new energy vehicles, there are not many countries that are relatively open, have policy support, and have low tariff barriers, which has led to a clustering phenomenon of Chinese car companies going abroad. For long-term development, it is still necessary to engage in healthy competition. In addition to vigorously selling cars, all aspects of products, services, and after-sales must be done well.
