Auto & Transportation

Huacheng Import and Export Data Observation reported that in the first half of this year, my country exported 1.218 million vehicles, a year-on-year increase of 47.1%. Entering 2022, China's auto export performance is still outstanding. The rapid development of new energy vehicle exports is believed by the industry to be mainly due to the iterative upgrade of Chinese auto products. 03 There are still hidden worries in the export of automobiles to the sea. Although the European market and the US market have brought new growth poles, China's automobile export still faces many challenges. The unstable foundation of overseas markets is also a major challenge for China's auto exports.

In the past 10 years, the annual export volume of my country's automobiles has been hovering around 1 million. In 2021, exports exceeded 2 million units for the first time, achieving a historic leap.

The export growth momentum is extremely strong, and car companies feel that the time is not waiting for me, lest they miss the opportunity. In the first half of this year, my country exported 1.218 million vehicles, a year-on-year increase of 47.1%. Judging from the latest import and export data released by the China Association of Automobile Manufacturers (CAAM), my country's auto exports hit a new record high in August, with the export volume exceeding 300,000 vehicles for the first time, a year-on-year increase of 65%. According to the analysis of the China Automobile Association, my country's automobile exports will increase to more than 2.4 million this year.

01Multiple factors drive auto exports to a new high

Previously, the export volume was almost stagnant, but in 2021, it will usher in a big explosion. The reason is not unrelated to the epidemic sweeping the world. Under the impact of the epidemic, many countries with incomplete industrial chains have encountered problems in automobile production, while my country's automobile industry system is relatively complete, and it is more effective to deal with supply chain crises. Coupled with the strict control of epidemic prevention and control in China, the production order of automobile enterprises has been restored quickly, and the production capacity has been less affected by the impact.

Entering 2022, China's auto export performance is still outstanding. This is mainly due to the serious shortage of cars in the world, and China has seized the development opportunity. Under the influence of factors such as the lack of cores and rising raw material prices in the global automobile industry, the production of automobiles in Europe and the United States and other countries has shrunk. However, the market demand in Southeast Asia and other places is still strong. Chinese auto companies bucked the trend and filled the gap of insufficient supply in the global auto market, thus bringing about huge increments.

According to Huacheng Import and Export Data Observation Report, as of September 11, due to the shortage of chips, the global auto market has reduced production by about 3.232 million vehicles this year. It is predicted that by the end of this year, the cumulative reduction in the global auto market will climb to 4.0712 million units.

On the smart new energy vehicle track, Chinese auto companies have formed a first-mover advantage in technological innovation, product iteration, and business models. According to the evaluation results of the "China's New Energy Vehicle Industry Development Report", last year, China's new energy vehicles ranked second in the world in terms of international competitiveness, and more and more Chinese new energy vehicle products are entering the markets of developed countries such as Europe.

In addition, the policy environment has also promoted the international development of auto companies. At present, my country is accelerating the creation of a high-standard free trade zone facing the world, and countries such as Australia and New Zealand have reduced tariffs on my country's auto products. And with the implementation of RCEP, my country's major self-owned brand car companies will also speed up the development of overseas markets. According to import and export data, from January to July this year, my country exported 395,000 vehicles to RCEP members, an increase of 48.9%.

02 The explosive growth of new energy vehicles

In the export tide, the increase in the export of new energy vehicles is particularly eye-catching. According to the import and export data of the China Passenger Transport Association, China's new energy vehicle exports will increase by nearly 150% in 2021 and 100% in the first seven months of this year, faster than the overall market.

The rapid development of the export of new energy vehicles, the industry believes that it is mainly due to the iterative upgrade of China's automotive products. The continuous improvement of product strength has enabled Chinese brands to launch high-end brands one after another, which can enter the high-end market and attract attention on the world stage.

The epidemic has eased, the global auto market has gradually recovered, and the order of foreign auto production has not fully recovered, which provides room for growth for Chinese new energy vehicle brands. At the same time, the wave of vehicle electrification has boosted the demand for new energy vehicles. Chinese auto brands are going out in the form of "intellectual output", and the advantages of self-owned brands in differentiated competition are becoming more and more obvious.

In addition, stimulated by new carbon emission regulations and subsidy policies in the European market, the penetration rate of new energy vehicles has increased significantly, which also provides development opportunities for China's new energy vehicle exports. For example, in Germany, the bicycle subsidy for the purchase of new energy vehicles is up to 9,000 euros; in Ireland, you can enjoy a subsidy of up to 5,000 euros, a value-added tax deduction of 5,000 euros, and a few hundred euros of charging pile subsidies. And in the draft "Fit for 55" promulgated by the European Union, the Commission proposed that the total carbon emissions of all registered new cars by 2030 should be reduced by 55% compared with 2021, and net zero emissions will be achieved by 2035.

In addition to the European market, the US market also has development potential. The Biden administration has issued a series of policies to promote the development of new energy vehicles. As before, Biden proposed a subsidy policy favoring new energy vehicle companies in the "American Clean Energy Act"; the House of Representatives proposed a clear subsidy plan for new energy vehicles, up to $12,500.

03 There are still hidden worries about the car going to sea

Although the European market and the US market have brought new growth poles, China's auto exports still face many challenges.

From the perspective of the supply chain, the short-term export difficulties are due to bottlenecks in the domestic supply chain, such as production reduction and production suspension caused by the epidemic and shortage of raw materials, and the production of new energy vehicles is difficult to meet domestic demand. In addition, the automobile industry has formed a global supply system, and European and American countries occupy a dominant position in the field of high-tech. However, affected by Sino-US relations, the United States has begun to restrict the supply of equipment for manufacturing 14nm chips to Chinese semiconductor companies, prohibiting Nvidia and AMD from selling high-end chips to China. Against this backdrop, China's auto supply chain will also face challenges.

From the perspective of the external market environment, the global economic uncertainty has increased, consumer confidence is low, and the cost of energy and electricity in some countries has skyrocketed, and demand has shown a downward trend, which may affect the prospects of China's auto exports. On the other hand, the regional cost and resource advantages of battery raw materials in Southeast Asia, South America, India and other places may also lead to intensified competition in the automobile export market. For example, Indonesia has the world's largest reserves of nickel resources, which is one of the indispensable elements for the cathode material of ternary lithium batteries. As another example, Thailand plans to produce about 1.2 million pure electric vehicles by 2036 and build 690 charging stations.

The unstable foundation of overseas markets is also a major challenge for China's auto exports. As most of the overseas sales of Chinese new energy vehicles adopt an authorized layout (cooperating with car rental companies or local dealers), it is difficult to localize sales channels and after-sales maintenance systems, resulting in weak brand awareness and influence. At the same time, the different market regulations in different countries further increase the difficulty of exporting. For example, the EU WVTA certification, one of the most stringent automobile certification systems in the world, can only be sold in this market after passing the certification, which means that Chinese automobile companies need to invest a lot of money and spend a certain amount of time on upgrading.

For Chinese auto companies, only by going out to expand a larger market can they become bigger and stronger. And this is destined to be a road full of thorns. With the explosive growth of new energy vehicles, the competition in overseas markets will become more intense. To establish a stable market competitive advantage, Chinese auto companies still need Brand building and other aspects continue to make efforts.