Chinese carmakers are taking market share away from Japanese rivals in western Europe, pushing the latter’s share to its lowest level in four decades. But uncertainties over European tariff policies could weigh on exports from the world’s second-largest economy, analysts said.
Since the end of last year, Chinese electric vehicle (EV) manufacturers – from giant BYD to start-up Leapmotor – have stepped up efforts to boost overseas sales amid weakening domestic demand and Beijing’s campaign against excessive competition, with Europe one of their strategic targets.
Data from the Bremen-based consultancy Schmidt Automotive Research showed those efforts had paid off, with their market share in 18 countries in western Europe surging to 10 per cent in April from only 4.9 per cent a year ago.
The rising popularity of Chinese cars had also squeezed the market share of Japanese marques to 10.3 per cent in April from 11.4 per cent a year earlier, well below the up to 14.3 per cent commanded by the likes of Toyota and Nissan in 2007.
As Chinese carmakers such as MG-owner SAIC Motor planned to roll out more hybrid EV models, the share of Japanese manufacturers in western Europe was on track to sink below 10 per cent – a level not seen since the start of the 1980s, the consultancy said.
The slow transition by Japanese carmakers to battery electric vehicles (BEVs), hampered by limited scale because of the domestic market’s lack of demand, had cost them market share, said Matthias Schmidt, a European autos analyst at the German consultancy.
“The Japanese need to bring genuinely strong BEVs to market to compete,” Schmidt said. “The danger is that European consumers may no longer see the nuances between Chinese and Japanese cars.”
According to data from the European Automobile Manufacturers’ Association, Chinese carmakers surpassed Japanese rivals in 32 countries in May for the first time, including European Union member states, Iceland, Liechtenstein, Norway, Switzerland and the United Kingdom.
In the same month, Japanese brands accounted for an 11.3 per cent share of new car registrations in those countries, down from 12.2 per cent a year ago, while Chinese marques expanded from 7.5 per cent to 12 per cent over the same period despite additional tariffs of up to 35.3 per cent on imported BEVs.
Chinese carmakers broadly maintained strong growth in overseas sales. BYD sold 175,349 units to global consumers last month, up by nearly 95 per cent year on year, while Geely Automobile, which sells petrol- and electric cars, saw its exports surge 157 per cent to 102,874 units – both records.
JPMorgan Chase and BNP Paribas projected that Chinese smart cars would take up 20 per cent of the European market within four years – though the outlook for Chinese carmakers remains clouded by the possibility that the EU could extend tariffs to plug-in hybrid electric vehicles (PHEVs) imported from the country.
Schmidt believed new duties could help slow the penetration of Chinese carmakers on the continent, granting breathing room to Japanese players.
Fitch Ratings also forecast a negative medium-term impact should the EU impose the tariffs. Jing Yang, director of Asia-Pacific corporate ratings at the rating agency, said higher duties and policy uncertainty could slow the growth of China’s car exports to Europe, though partly mitigated by robust demand from emerging markets.
However, Morgan Stanley said the tariff threat could give Chinese exports a short-term boost as carmakers rushed to front-load PHEVs, as details were unlikely to be confirmed in the next one to two months.
“The introduction of duties on BEVs appears to have had little effect on China’s overall export momentum or competitive dynamics,” Morgan Stanley said in a June report. “We wonder if the EU will seek a different approach if it is to introduce duties on PHEVs.”
