German automakers fight to defend their turf from Chinese rivals
German automakers have turned up in full force at Shanghai's Auto Show as they fight to stay on top of consumer trends in the country that will define whether they maintain their market dominance in the electric age both at home and abroad.
Their heavy presence - with the entire board of Volkswagen AG and more than 100 VW employees attending, in contrast to Japanese or French automakers - shows they are taking the challenge seriously, said Yale Zhang of Shanghai-based consultancy Automotive Foresight.
But with German companies relying on China for a third of their passenger vehicle sales, they also have the most to lose.
"A lot of features in our cars are inspired by China," Oliver Zipse, CEO of BMW, accompanied by his sales and technology chiefs, told a news conference, adding that the Chinese market was ahead of the global curve.
His comments mark the power shift from the combustion-engine age when German cars were seen in China as the pinnacle of global engineering, to the electric age when German automakers are learning from their Chinese counterparts who have moved faster on developing technology for electric vehicles (EVs) that sets them apart.
Volkswagen executives have said the company's unrivalled global scale will help it win the race for affordable EVs - but that capacity could turn from a blessing to a curse if sales dip, with the market share of China's BYD Co Ltd surpassing that of the Volkswagen brand's this year so far.
While the battery-electric vehicle market share of German automakers in China is rising, it is still miniscule. The combined market share of the battery-electric vehicle market in China held by Audi, BMW, Volkswagen and Mercedes-Benz rose to 4.8 per cent in 2022 from 2.2 per cent in 2020, according to a Reuters analysis of sales data from the Chinese Association of Automobile Manufacturers. The EV sales of all four German brands added up to only a quarter of BYD's in 2022.
German carmakers' total market share in the country rose from 19.9 per cent in 2015 to 24.6 per cent in 2019, but has fallen back down to 19.1 per cent, according to data provided to Reuters by Germany's autos association VDA.
"The Chinese market is no longer as stable for German carmakers as it was," Thomas Luk, partner at management consultancy Kearney, said on the sidelines of the Shanghai show.
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