Summary
– European automakers face competition from powerful Chinese electric vehicle manufacturers as they launch new products and dedicate resources to entering the European market
– Chinese EV manufacturers like BYD, Chery and GWM are focusing on various tactics such as sponsoring events and expanding dealership networks to break into the European market
– Chinese EV makers are adapting their models for European consumers and are backed by government subsidies, allowing them to charge slightly below comparable models from Western automakers
– Focus on improving safety ratings, repair and service operations, distribution, and resale values to attract European customers
– Chinese automakers are rapidly expanding in Europe, with strategies in place to increase brand presence and appeal to European consumers, despite low initial awareness.
Article
Starting in the 1980s, European automakers have dominated the Chinese market with little local competition. However, now they are facing competition in their home turf in Europe from Chinese electric vehicle manufacturers such as BYD, Chery, and Great Wall Motor. Chinese automakers are preparing to launch about 20 new electric vehicle models over the next five years and are investing heavily in sales and marketing in Europe, their most important export market.
Chinese electric vehicle makers have been studying European car-buyers for years, hiring industry veterans and selecting distributors with extensive local knowledge to take on Tesla and legacy automakers. BYD and Chery have announced plans to manufacture cars in Europe in an effort to break into the market. These companies are deploying various tactics such as sponsoring high-profile sporting events, building out dealership networks, and focusing on service and repair operations to attract European consumers.
While Chinese automakers’ European sales currently remain small due to limited brand recognition, deliveries are growing rapidly and could surge with the release of additional models across various price segments. BYD, for example, has seen its sales triple to 15,000 vehicles in 2023 after exponential growth in China and other export markets. To increase their appeal to European customers, Chinese automakers are focusing on all facets of the European automotive ecosystem, from branding to financing tools to repairs and resale values for both private and corporate customers.
Chinese auto industry players enjoy major cost advantages over foreign competitors due to government subsidies and China’s dominance in battery-minerals refining. These automakers are leading a price war in China, selling a range of EVs priced between $10,000 and $30,000. While some countries like the US have imposed tariffs on Chinese EVs, European auto executives believe that higher tariffs alone will do little to protect them from Chinese competition unless they can match their price and value quickly.
As Chinese automakers expand exports to Europe, they are implementing strategies to increase their appeal to European consumers, including improving safety ratings, strengthening repair and service operations and distribution, and recycling values. These companies are delving into complex questions such as how to structure warranties and price repairs in Europe, where service labor costs are higher than in China. Chinese automakers are taking a comprehensive approach to understanding what constitutes long-term success in Europe, focusing on keeping cars on the road throughout their lifetime.
Despite the challenge of reaching European consumers who are unaware of Chinese brands, Chinese automakers are increasing their brand presence through social media, high-profile event sponsorships, and partnerships with established dealer networks. For example, BYD is partnering with a network of dealerships in Italy, while GWM and Chery are partnering with existing dealerships that also sell other established brands. Awareness of Chinese cars is rising in Europe, with research showing an increasing willingness among consumers to consider Chinese-made cars. Additionally, BYD is investing in sponsorship of the Euro 2024 soccer championship to boost its brand presence in Europe.
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