Saturday, July 24, 2021

Business briefing: China’s car market is booming after rapid Covid recovery

“Consumers really know their cars now,” he says. “A few years ago, China was a supply market, but now it has evolved. You can see that with the issues that Jaguar Land Rover has had around quality, which it still suffers from. And you can see it with the current extremely negative headlines about problems with Teslas – although I also think that the brand will have the opportunity to recover. Ultimately, it’s a popular EV brand, and that’s important in this market.”

While German companies’ dominance of the premium car sector in China looks solid, Kang highlights the progress of emergent domestic brands as another trend to look out for.

“Chinese brands had a Chinese market share of 30% just a few years ago, focused on the lower end of the market. Today it’s 40% and across a far greater spread of vehicle types. That’s real progress.

“The spend on R&D has grown exponentially; quality has taken a leap forward. But just as crucially, the Chinese makers have been quick to add advanced tech into their cars.

“Today, even entry-level models offer connectivity and screen functionality that the global brands offer only on high-end cars. It’s a strategy that plays to the strengths of Chinese knowhow, and it’s cutting through, especially with younger buyers. It could also be a way to differentiate if they launch internationally.”

History is less of a blueprint than ever in these turbulent times, but it’s notable that almost every marque that went global in the past century did so off the back of significant sales in its home market. Therefore, with China offering the biggest opportunity for scale bar none, Kang expects international launches to follow.

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“Changan, Chery, Geely and Great Wall are the mainstream brands to look for, although they will probably look to emerging markets first, such as South America, Iran and the Middle East, rather than jumping straight into the US and Europe,” he said.

“It’s significant that the likes of Lynk&Co and Nio could move faster. Watch out for their service and support methods: they have a very different approach to how they nurture and develop their customer bases, using digital communications, apps and more. It’s not certain yet, but that could differentiate them and put them at an advantage.”


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