China is an industrial giant. It first flooded the market with ‘cloned’ and cheap goods. Before the end of the noise about the substandard products, the industrial state was already making original products. Companies such as Huawei attracted millions of loyal customers almost overnight. Today, Chinese cars are making ripples in the global car market.
The Chinese government has been very instrumental in supporting the local auto industry. Through favorable government policies such as tax breaks, subsidies, and government contracts, the Chinese car industry has skyrocketed in a New York minute.
Besides government support, Chinese automakers have had strategic advantages that are on course to overthrow legacy automakers.
How China is Winning the Car Manufacturing Race
Since 2009, China has been the largest manufacturer of automobiles in the world.
Bigger than Europe, Japan, and the US combined.
Take a second and let that sink in! While at it, hear this, China overtook the most popular and recognized car manufacturing powerhouses over 10 years ago.
In 2022, Chinese car manufacturers were producing 27.02 million cars. The global production during that year was about 85 million units. This effectively gave China a 31.7% market share.
Tyranny of Numbers
With a population of over 1.4 billion people, the automotive industry in China already has its hands full. After catering to the domestic market, manufacturers still have some left to export. As of now, China is the second-largest exporter of cars.
Of the 27.02 million cars, 3.11 million cars were exports, accounting for 11.5% of all global car exports.
Geopolitics
Japan became the largest car producer in the 1970s. In the following years, the Japanese dominated the auto industry with exploits in almost all automotive niches, including motorsport.
Recently, Toyota Gazoo Racing dominated the WRC 2023 Safari Rally with a 1-2-3-4 finish.
Despite the decades-long expertise and technological advancement, Japan continues to face fierce competition from China. Between January and March 2023, China exported 1.07 million cars, while Japan exported 950,000 units.
The invasion of Ukraine resulted in sanctions against Russia, handing China a crucial market for their cars. Chinese cars have since gained popularity in Russia.
China borders Russia to the north, and this is a prime market for Chinese manufacturers.
Electric Revolution
Electric vehicles are gradually carving a place in the global car industry. China has joined in and is currently a global leader in EV technology.
In 2001, the government included EV development as part of its five-year economic blueprint. Wan Gang, a former Audi R&D executive, takes over as minister of science and technology in 2007. With his background and zeal, he led the development of EV technology to what it is today.
The all-in approach to EVs, coupled with government subsidies and tax breaks, supported the technology to its maturity.
At first, the public transport sector adopted EVs, and since then, the EV sector has grown exponentially. Tesla operates a factory in China thanks to the favorable EV regulations put in place by the Chinese government.
Today, over half of EV sales in the world are sold in China. In 2022, over 10 million EVs were sold globally. Of the 10 million, 6 million were made in China, a 60% share.
Strategic Partnerships
The industrial capability of Chinese car production can be attributed to the initial joint ventures between foreign carmakers and government-owned manufacturers.
From 1994 to 2022, foreign automakers were required to partner with local manufacturers on a 50:50 basis.
The majority of the partnerships were between state-owned companies and legacy automakers such as Toyota, Nissan, Volkswagen, Honda, Kia, GM, Mercedes, and Renault. This initiative ensured that the sector harnessed its capacity and technology while keeping profits.
While the established carmakers still lead in gas-powered car technology, local Chinese manufacturers are industry leaders in EV technology.
Established Supply Chains
Today, China accounts for close to 20% of global manufacturing. China has transformed into a trade and manufacturing giant in the last three decades. It is the heart of most global supply chains.
The auto industry is already dominating. With already established supply chains, it is only a matter of time before China conquers the global auto industry. Additionally, China is embracing digitization by incorporating IoT and AI in supply chain operations.
Warehouse operations are starting to be carried out by robots.
Popular Chinese-Built Cars, in China
- Wuling Hongguang Mini EV
This Mini EV is the best-selling EV in China, with sales in China and abroad reaching over 1 million units. It is manufactured by Chinese companies Wuling and SAIC, in collaboration with GM, since 2020.
Its success has prompted other major Chinese brands to come up with similar designs.
- Haval H6
Haval H6 is the best-selling SUV in China since 2021. It is a product of Great Wall Motor. By 2015 1 million Haval H6s had been sold, 4 years after it was introduced.
- BYD Qin Plus
Manufactured by BYD Auto since 2012, BYD Qin Plus comes in all-electric, plug-in hybrid, and internal combustion.
In 2015, it was the second-best-selling plug-in hybrid in the world. Between January and March 2023, BYD Qin Plus was the top-selling car in China.
- Roewe Ei5
The Roewe Ei5 is among the best-selling EVs in China. Produced by SAIC Motor, it comes as an electric station wagon. It was launched in 2017 and claims a battery range of 300km.
- Changan C S75
The Changan C S75 is a product by Changan Automobile. It is a compact crossover SUV that was launched in 2014. Since then, it has had 2 facelifts, with a PHEV model also produced. The millionth unit was announced in 2020.
Are Chinese Cars Reliable?
The demand for cars in China is huge. As a result, the auto industry has had monumental advancement over the past two decades.
China is the only country with the most affordable electric cars today.
Top legacy brands have partnered with their Chinese counterparts over the years. Appropriately, China has taken advantage of these joint ventures, and car manufacturers are producing cars with modern designs. These modern cars are original, and the manufacturers are no longer duplicating other brands.
The question is, are they reliable?
The materials and technology used in modern Chinese Cars are commensurate with that used by European, Japanese, US, and Korean auto manufacturers. While there is a difference in safety and quality as per expert quality inspections, Chinese cars are not badly off.
A brand quality ranking report done by the Chinese Automobile Quality Network in 2022 shows that the quality has improved as compared to previous years. However, there is a significant disparity between the highest-ranked and the lowest-ranked.
The Future can only get better for Chinese Cars
Perception is reality. If the Chinese want to shake off the ‘substandard global perception’, they need to finesse their way into the hearts of the global population, just like they killed it with global trade. If they succeed, China will dominate the car industry for eons to come.
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