According to the report cited by the consultancy firm AlixPartners the Chinese automakers are expected to continue with their rapid overseas expansion to have almost 33% share of the the global market share by 2030.
As per the current year’s market growth rate, the share of Chinese automakers is expected to occupy 21% of all the market share by the end of this year.
In this article, we will look at what caused this growth and how the growth will impact the global automobile industry.
Details from the Report
According to predictions from AlixPartners, by the end of 2030, Chinese automakers’ overseas sales are expected to double from the current 3 million units sold annually to over 9 million units. This rise in the number of units shows a growth from 3% to 13% by the end of 2030.
The reasons that the consultancy firm showed for the growth have to do with the production process, financial setup, and manufacturing strategy of Chinese automobile makers.
Further dissection of the data shows that the growth is going to be more focused in countries like Mexico with the entirety of Mexico’s automobile market giving up 20% of its market share to Chinese brands.
The hold of Chinese brands in Europe is also prominent with a predicted increase in its stake in the European automobile market to rise from the current 6% to 12% by 2030.
This is however contrasted with the market growth that the firm has made for the Chinese brands in the North American markets which stands at a measly 3%.
The reason for this low number is supposedly due to the stringent and highly safety-focused laws that cause a hindrance to the entrance of Chinese brands into these markets.
The same pattern of single-digit growth can also be seen in countries like Japan and South Korea for the same reasons.
Now that we have looked at the growth predictions that have been made for the Chinese automotive industry till the year 2030 let us now look at what exactly sets the Chinese automobile brand apart from the others in the following section.
Reasons for the incredible growth predictions for the Chinese brands
The primary reason behind the rapid growth of the Chinese automobile industry is due to their faster rolling out phase for automobiles.
The newer models for these companies have averaged about 1 to 2 years to complete the manufacturing and launching process compared to the traditional automobile firms.
Another one of the major reasons that gave the Chinese brands an advantage is their 35% cost advantage along with the flexibility that the brands enjoy in the global market that lets them lower their prices to offset the tariffs in Europe and other countries worldwide.
This has to do with the relatively lower labor cost and cheaper raw materials that the Chinese market provides to these companies for their production.
The faster and more coordinated supply line process is also something that has worked to the advantage of the Chinese automakers compared to similar firms from other countries. This strategy of automobile manufacturing has increased their growth in the overseas market.
The newer methods will also likely increase the stake of Chinese build automobiles in their local market with an estimated increase from 26.7 million Chinese vehicles circulating in the Chinese market this year to 32 million by 2030 which should amount to almost 70% of all automobile sales in the Chinese market, said AlixPartners.
Public opinions
If we look at the commentary made by prominent figures in the automobile industries one of the relevant voices was that of Mark Wakefield, global co-leader of the automotive and industrial practice who opined that the takeover of the Automobile market cannot happen by just rushing the things that other companies do with their automobile manufacturing process.
Another individual who commented on the prediction was Andrew Bergbaum, another co-leader of the automobile and industrial practice who shared his observation that the Chinese brands often put a lot more focus on aspects like designing and in-cabin tech while simultaneously maintaining their cost advantage.
Andrew also commented that the jumpstart that they have in the electric and hybrid vehicle technology can also be a factor assisting in their market growth.
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Final Thoughts
With mixed opinions shared by major industry players, we can conclude that the growth of the Chinese Automobile industry seems to be inevitable despite reservations in the global market.
The factors that have helped them with their growth up until now will likely continue to help them in later years with their growth.
The only unanswered question is about how much this growth will push the Chinese Automobile industry as a major player in the global Automobile market.
