The world’s largest auto market, China, has been a hub of growth and development for car brands. Over the years, China’s auto market has been dominated by international brands like Toyota and Volkswagen operating in joint ventures with Chinese automakers. However, this year, Chinese automakers are set to take over the auto market for the first time in history. According to a recent study by AlixPartners, Chinese automakers are on track to account for just over 50% of the cars sold in their home market this year. In this blog post, we will explore the implications of this shift in market dominance.

Chinese Auto Sales and Rise of Electric Vehicle Sales:

One of the reasons for this change in dynamics has been the rise of domestic electric car makers in China like BYD, Nio, and Xpeng Motors. The growth of electric vehicle sales has been remarkable. AlixPartners predicts that more than half of all vehicles sold in China by 2030 will be electric. The Chinese government has been promoting electric vehicle sales by providing substantial subsidies for new energy vehicles. AlixPartners estimates that the Chinese government will provide approximately $57 billion in subsidies from 2016 to 2022, while the US government has provided only $12 billion over the same period.

Competitive Pricing:
Chinese automakers have been able to produce vehicles at competitive prices, which has given them an advantage over international brands. Brands like Geely and Changan have been working on upgrading their product portfolios, and they aim to maintain sustained growth in the domestic and international markets.

Faster Rollouts of New Models:
Chinese automakers have been outpacing international brands in rolling out new models. For instance, Tesla’s Model 3 was the best-selling electric car globally in 2020, and around 138,000 units were sold in China alone. However, local companies like Nio and Xpeng, have also been ramping up their sales figures, selling around 113,000 units and 27,000 units, respectively.

Growth Forecast:
The AlixPartners study predicts that China’s overall auto sales will grow by 3% this year, recovering to the level of sales before COVID-19. It further predicts growth to 30.6 million vehicles in 2030, which is more than half of the total vehicles sold. Electric vehicle sales are also expected to rise significantly in the coming years.

Implications for the Industry:
The rise of Chinese automakers will bring about implications that could impact the global auto industry. For instance, there may be a shift in pricing strategies to remain competitive, as automakers must contend with electric and gas-powered cars. Additionally, the global auto industry may be impacted by the Chinese automakers’ growth in international markets. For example, Chinese cars are already present in many countries around the world. However, with this rising dominance, there is potential for further global growth.:

The rise of Chinese automakers to control a majority share of the Chinese auto market marks a significant milestone in the industry. Chinese automakers’ growth in the market has been driven by their competitive pricing, faster rollouts of new models and the rise of domestic electric vehicles. As the electric vehicle market continues to grow, it is clear that China is leading the way globally. Chinese automakers’ increasing dominance in the domestic market could have implications for the global auto industry, and it will be interesting to see how this growth influences international markets in the coming years.