New cars going abroad

China's car exports have witnessed a new breakthrough.

According to data from the China Association of Automobile Manufacturers, in September, the cumulative domestic car exports reached 539,000 units, a year-on-year increase of 21.4%. From January to September this year, the total domestic car exports reached 4.312 million units, a year-on-year increase of 27.3%.

Among them, from January to September, 3.384 million traditional fuel vehicles were exported, a year-on-year increase of 32%. In the context of the continuously squeezed domestic fuel vehicle market, exports have become a new incremental path for auto companies.

Cui Dongshu, secretary-general of the Passenger Car Market Information Council, analyzed that the main driving force this year is still the improvement of the competitiveness of Chinese products, the slight growth of the European and American markets, and the complete replacement of international brands in the Russian market by Chinese cars, especially the increase in exports driven by the improved export competitiveness of China's fuel vehicles.

At the same time, although affected by the EU's policy of promoting new energy exports this year, from January to September, China's new energy vehicle exports still reached 928,000 units, a year-on-year increase of 12.5%.

The Passenger Car Market Information Council stated that with the emergence of China's new energy vehicle scale advantages and market expansion needs, more and more Chinese-made new energy brand products are going abroad, and their recognition in overseas markets continues to increase. Although recently affected by some interference, the exports of self-developed plug-in hybrids to developing countries have grown rapidly, with a bright future.

Strong growth momentum

In 2023, Russia became China's largest car export destination, with China exporting over 900,000 complete vehicles to Russia, a year-on-year increase of up to 459%. This year, Russian demand has risen again, and it remains China's largest car export market.

Data shows that from January to September, China exported 849,951 vehicles to Russia, a year-on-year increase of 33%, far ahead of other regions. In addition to Russia, the top 10 countries in terms of total vehicle exports from January to September 2024 include Mexico with 353,416 vehicles, the United Arab Emirates with 230,819, Belgium with 217,547, Brazil with 205,416, Saudi Arabia with 185,089, the United Kingdom with 150,737, Australia with 133,171, the Philippines with 122,706, and Turkey with 102,395.

Among them, Russia, Brazil, the United Arab Emirates, Mexico, and Belgium showed strong growth momentum, with Russia and Brazil becoming the core regions for the increment of China's car exports. At the same time, China's car exports to the EU declined, and exports to the United States and Australia also shrank.

Image source: Zeekr

In terms of specific powertrains, Russia's fuel vehicle market contributed significantly this year, followed by Mexico and the United Arab Emirates, which exported a large number of fuel vehicles with distinctive characteristics. Meanwhile, Mexico and Brazil also stood out in the export growth of plug-in hybrid models. Belgium, Thailand, and the United Kingdom performed well in pure electric vehicle exports.

In 2022, China's new energy vehicle exports to the EU accounted for a peak of 46% of the total. Recently, the proportion of pure electric vehicle exports to Europe and Central and South America has declined, and the demand for plug-in hybrid models has also sharply decreased.

"From the perspective of proportional changes, China's exports to the European market accounted for 39% in 2023 and fell to 32% from January to September this year," Zhao Yang, vice president of the China Council for the Promotion of International Trade's Automotive Industry Branch, said at the 2024 Global New Energy Vehicle Cooperation and Development (Shanghai) Forum. "China's exports to the North American market have increased, and the growth in the South American and Middle Eastern markets has offset the decline in the EU market. The main contribution to the increase in the North American market comes from Mexico, with a more than fivefold increase compared to 2023, while exports to the United States fell by 50% and to Canada by 20%. The decline in the EU has been offset by the growth in emerging markets, and it is expected that exports will continue to grow by around 20% this year."

Judging from the development curve of China's car exports, the annual export volume remained at around 1 million units from 2017 to 2020, and then began to grow rapidly in 2021. In 2021, 2.19 million vehicles were exported, 3.4 million in 2022, and 5.22 million in 2023, making China the world's largest car exporter. In 2024, China's car exports continued to show strong growth. As of September, exports had reached 4.69 million units, firmly establishing China as the largest car exporter.

Zhao Yang believes that China has made remarkable progress in the field of new energy vehicles. On the one hand, the rapid growth of the scale of China's new energy vehicle industry has made it a key force driving the rapid development of China's automotive industry. On the other hand, China's new energy vehicle industry is highly competitive, forming a complete industrial chain from upstream mineral raw material processing and power batteries to downstream complete vehicles, and occupying a dominant position in each link of the industrial chain.

Chery leads the way

According to data from the China Association of Automobile Manufacturers, among the top 10 vehicle exporters, Chery exported 109,000 vehicles, a year-on-year increase of 20.7%, accounting for 20.2% of total exports, ranking first. From January to September, Chery's export sales reached 829,000 units, a year-on-year increase of 27.9%, also ranking first.

As one of the earliest domestic auto companies to explore overseas markets, exports have become an important part of Chery's sales. In September, Chery sold 245,000 vehicles, of which 100,000 were exported, accounting for 40% of Chery's total sales. Notably, Russia, Brazil, and the Middle East, which currently have the largest increments in China's car exports, are the main markets targeted by Chery.

Unlike Chery's growth, SAIC Motor, which mainly exports to the European market, has shown some weakness in sales this year. From January to September, SAIC Motor exported 664,000 vehicles, a year-on-year decrease of 12.7%.

Image source: SAIC Motor

Due to the EU's anti-subsidy investigation and the slowdown in demand for electric vehicles in Europe, SAIC Motor has been significantly affected, and this may continue for some time.

The third-largest exporter is Geely Group, which exported 39,183 vehicles in September, a year-on-year increase of 51%; and exported a total of 314,038 vehicles this year, a year-on-year increase of 68%.

In addition, many auto companies have seen a surge in exports this year. Among them, BYD's cumulative exports in the first three quarters reached 302,000 units, a year-on-year increase of 96.3%. GAC Group's cumulative exports in the first three quarters reached 95,000 vehicles, a year-on-year increase of 112.0%.

Recently, Li Yunfei, general manager of BYD's Brand and Public Relations Department, said at the "Voyager's Journey" 2024 China High-Quality Enterprises Going Abroad Forum that SAIC Motor and Chery have done well in car exports and belong to the first tier among Chinese auto companies going abroad. BYD should learn from them and is currently the best in the second tier.

Deepening overseas expansion

Currently, while expanding vehicle exports, Chinese auto companies are also accelerating localized production in overseas markets.

"Today, Chery has accumulated 15 million car users, of which more than 4.2 million are overseas users, who are our breadwinners," said Yin Tongyue, secretary of the Party committee and chairman of the board of Chery Holding Group. "Chery has been going abroad for over 20 years and has learned many lessons. One of the deepest feelings is that once entering a market, we must change from 'you' to 'us,' abide by local laws and regulations, respect local customs and habits, and take root to become a local corporate citizen."

Wei Jianjun, chairman of Great Wall Motor, also believes that "Chinese auto companies have not achieved localized production in many regions when going abroad, leading to higher tariffs and weaker competitiveness and profitability. In addition, other countries will not allow you to sell Chinese cars locally indefinitely." In Wei Jianjun's view, globalization cannot be solved by electrification alone. Each region has different market demands, and globalization requires producing products that meet local needs." Chinese auto companies such as BYD, Chery, Changan, Great Wall, GAC, and SAIC have announced plans to build or expand 10 overseas factories in countries like Thailand, Indonesia, and Brazil. At the same time, brands such as BYD and Volvo are actively promoting expansion plans in Europe. BYD is building a factory in Hungary and plans to establish a new factory in Turkey to enter the EU market. Xpeng Motors and Geely's high-end electric vehicle brand Zeekr have also indicated that they are considering localizing production.

Yin Tongyue said that we should enter overseas markets in a way that "takes root" and become "contributors" that benefit the world. A truly global enterprise not only engages in global trade and lays out global markets but also has a global business philosophy, global responsibility, and value contribution.

A research report from Shanghai Securities pointed out that according to Global Auto Trade, Chinese auto manufacturers have already built and put into operation full-process manufacturing plants in nine countries, with an annual production capacity of 1.2 million vehicles as of 2023. Shanghai Securities believes that auto companies with faster localized production processes in Europe are expected to mitigate the impact of tariffs. In the past, Chinese auto manufacturers mainly expanded overseas markets through exports and overseas assembly of parts, but due to tariff measures implemented by some countries or regions, investment in full-process manufacturing has gradually gained momentum.

"For us auto people of this generation, it is our destiny to have Chinese cars go abroad," Wei Jianjun said.

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