China, from market of conquest to sales slump for European brands

All the fault of the pandemic. If, before covid, only 36% of the Chinese were choosing cars from domestic brands, in less than three years there has been a revolution that has ended up taking European car manufacturers by surprise. So much so that at the end of 2023, the Byd brand became the best-selling brand in China, to the detriment of the Volkswagen group, which had secured an established supremacy and which now has to reckon with a drop in 2024 profits compared to 2023 from 17.8 to 12.4 billion euros, largely due to the 8.3% drop in sales in China.

Not only the generalists also the European luxury brands recorded significant losses, Porsche and Bmw noted that their sales in China fell by 28% and 13.4% respectively in 2024 compared to the previous year. Mercedes itself had to reckon with a contraction of 8.3%. Not to mention Japanese rivals such as Toyota and Honda in the same or almost the same condition as the Europeans. A sales crisis that, however, only concerns foreign brands, given that in China the car market has closed the last two years at record figures.

The change in the perception of Chinese buyers can be explained by local manufacturers who are increasingly able to offer competitive models that win more favour than, for example, Europeans. It is no coincidence that established brands such as Volkswagen and Audi have decided to offer cars conceived exclusively in China for local consumers, challenging models that are increasingly competitive not only in terms of purchase price, but also in the premium sector that offer anything but generic solutions.

A challenge that also arises in the constantly growing export business. This news does not call into question the leadership of European brands at national level for the time being, but represents an additional challenge in the future. Meanwhile, topping the top 10 among export brands is Chery with 1.144 million units exported, followed by Saic with 929 thousand, Byd with 433 thousand, Baic with 274 thousand, Tesla with 260 thousand, Jac with 249 thousand and Dongfeng with 246 thousand. While the ranking by growth saw Byd leading with + 71.8%, Changan with + 49.6% and Jac with + 46.7%.

At the same time, China has become a lifesaver for many foreign brands at a time when, for example, the European and North American car markets are no longer growing, while China has become their only major source of growth. After all, between 2013 and 2023, the total volume of registrations in Europe increased by only 4%. While in the US and Canada it remained unchanged at 17.3 million cars sold. In China, on the other hand, sales of new cars increased by more than 25% overall over the same period.