China has become the world's largest automobile exporting collective trend of independent brands is gaining momentum

Going global has become a new engine for the growth of the Chinese automotive market. In the first quarter of this year, China surpassed Japan and Germany to become the world's largest automobile exporting country for the first time. In the first three months of this year, a total of 1.069 million new cars were exported domestically, surpassing Japan, which had previously held a leading position in global automobile exports (with 1.047 million cars exported in the first quarter).

A reporter from China Business Daily analyzed the composition of exports and found that Tesla China, SAIC Group, Chery, Geely, Great Wall Motors, Changan, and BYD are the "big players" in automobile exports.

It is worth noting that the export of new energy vehicles is an important component of China's automobile exports. In 2022, China's automobile exports reached 3.11 million units, a year-on-year increase of 54.4%, of which 679000 units were new energy vehicles, a year-on-year increase of 120%. Tesla has contributed a significant share of new energy exports.

Xu Haidong, Deputy Chief Engineer and Minister of Industry Research Department of China Association of Automobile Manufacturers, said in an interview with reporters, "China's new energy vehicle products have been exported to developed countries, and the unit price of products has also significantly increased. China's new energy vehicles are exported in large quantities to developed regions such as Europe, such as Belgium, the United Kingdom, Germany, France, Norway, etc. The average price of products in Western Europe, Northern Europe, Central Europe and other markets has reached the level of 30000 US dollars

Thanks to policy drivers and active participation and efficient development of enterprises, most of China's domestic brands have a first mover advantage in electrification and intelligence. In addition, the domestic new energy vehicle industry chain is becoming increasingly perfect, and the new energy vehicle market is growing explosively, which continues to enhance the international competitiveness of China's local new energy vehicle manufacturing enterprises and gives them the strength to enter the market of established automotive industrial bases such as Europe, "said Zhou Wenyu, Deputy Director of the Industrial and Commercial Enterprise Department of Fitch Ratings Bohua, in an interview.

It should be noted that although automobile exports have grown significantly in recent years, enterprises that increase both income and profits are still rare. For going global, independent brands need to be well prepared for the long term of "building a strong foothold and fighting in the wrong battle".

Automobile exports enter a period of rapid growth

In recent years, China's automobile exports have shown explosive growth.

Before 2020, China's automobile exports had been hovering around 1 million units for about 10 years; In 2021, domestic automobile exports skyrocketed by over 2 million units, surpassing South Korea to become the world's third-largest automobile exporting country; In 2022, China's automobile exports reached a new high of 3.11 million units, surpassing Germany for the first time and becoming the world's second largest automobile exporting country. In the first quarter of this year, China's automobile exports easily surpassed the million mark, surpassing Japan and becoming the world's largest automobile exporting country.

The China Association of Automobile Manufacturers predicts that the domestic automobile export volume will reach 4 million units this year, and it is expected to surpass Japan and become the world's largest automobile exporting country this year.

Why can China's automobile exports achieve rapid growth for several consecutive years? According to Xu Haidong's analysis, "The competitiveness of Chinese brand cars has significantly increased, which is the fundamental reason for the growth of overseas exports. Currently, Chinese brand cars are not far behind joint venture companies in terms of exterior design, product quality management and control systems, supply chain quality and efficiency management, and service system development and innovation. They even surpass joint venture car companies' products in new energy and intelligent connected vehicle products. Such products can attract foreign consumers and expand export scale

In the past three years, the overseas automotive supply chain has been severely impacted by the Black Swan event, and the insufficient production and supply of automobiles in some countries has also provided growth opportunities for China's automotive exports. Zhou Wenyu said, "China's sound domestic industrial chain and continuously strengthening competitiveness of car companies have made up for the shortage of overseas car production and supply, thereby helping to boost the export of passenger cars and some types of commercial vehicles in China. Data shows that many car companies such as SAIC Group, Tesla China, Chery, and Changan have performed well in exports

From the perspective of export value, the General Administration of Customs data compiled by the China Association of Automobile Manufacturers shows that in the first quarter of 2023, the top ten countries for China's automobile exports were Russia, the United States, Mexico, the United Kingdom, Belgium, Japan, Australia, Germany, the United Arab Emirates, and South Korea.

It is reported that there are two main reasons for the top export value of Russian cars: firstly, under the Russia Ukraine crisis, European car manufacturers chose to withdraw, and Chinese brands seized the opportunity to enter the Russian market; Secondly, the competitiveness of China's new energy exports has been enhanced. In addition, Chinese domestic brands represented by Chery and Great Wall have a forward-looking layout, helping car companies quickly seize market opportunities.

As is well known, the United States is a powerhouse in the automotive industry. Why can Chinese cars be exported in large quantities to the United States? It is understood that the main export brands to the United States are joint venture brands, with specific models including Changan Ford Focus, SAIC GM Enclave, SAIC Cadillac CT6, GAC Honda Fit, and others.

China has formed a mature automotive industry chain with strong economies of scale. Tesla China and some traditional joint venture brands, such as Changan Ford and SAIC General Motors, have also chosen to utilize domestic cost and industry chain advantages to produce and export to developed economies including the United States, "said Zhou Wenyu.

Shift from whole vehicle export to "origin sales"

The domestic market is a market of stock competition, and Chinese brands can only continue to increase their sales scale if they go global, "said Wei Jianjun, Chairman of Great Wall Motors, in public multiple times.

In order to explore overseas markets, reporters have noticed that in recent years, domestic brands have begun to accelerate the deployment of localized production in overseas markets, shifting from trade exports to the overseas model of investing and building factories locally.

In February of this year, Chery announced an investment of $400 million to build a factory in Argentina, which is expected to produce 100000 cars annually. As of the end of 2022, Chery has established 10 overseas factories worldwide.

Since exporting pickup trucks in 1998, Great Wall Motors has regarded overseas markets as an important growth pole. In order to better go global, Great Wall Motors invested $500 million and spent 5 years building the Tula factory in Russia, and then expanded several factories in multiple countries through acquisitions.

The CBU (whole vehicle export) or fully assembled model is unsustainable for automotive products in any market, and origin sales are the true norm. ”Mu Feng, President of Great Wall Motors, pointed out to reporters. For the ASEAN market, Great Wall Motors already has a Rayong factory; for the Brazilian market, localized models will be officially produced this year; for the EU market, Great Wall Motors is actively deploying its industrial layout, including OEMs and core components

As an early pioneer in overseas markets, Geely has established modern vehicle and powertrain manufacturing factories in China, the United States, the United Kingdom, Sweden, Belgium, and Malaysia, with over 4000 sales outlets of various types.

BYD's overseas expansion has also entered a new stage. Since 1998, it has been promoting its battery and electric bus products overseas, and now, new energy passenger vehicles have become the main force for BYD's overseas expansion. BYD exported about 38700 vehicles in the first quarter, a year-on-year surge of over 1000%. A securities industry analyst told reporters that BYD passenger cars once faced a situation of "difficult to find one car" in the European market.

The accelerated development of overseas direct investment by Chinese brand automobile enterprises has accumulated experience for the export of Chinese brand automobiles. The direct investment model is an important and main development model for the internationalization of automobile enterprises, and also an important means for Chinese automobile enterprises to build international brands, "said Xu Haidong.

It is worth mentioning that in addition to actively deploying localized production, many domestic brands consider globalization during product development and design stages.