These trends include the continued preference for passenger vehicles made by foreign companies over those made by Chinese companies (the former accounted for 62% of total passenger vehicles sales in 2020), as well as the growth in sales of commercial vehicles (5.13 million sold in 2020), trucks (4.69 million sold in 2020, most of which were heavy and light trucks, although medium-sized trucks and minivans also saw growth in sales), sports utility vehicles, and pick-up trucks. Further, China has now been the largest market for vehicles worldwide since 2009 and is home to over 70 cities with more than 1 million registered vehicles, of which 13 have more than 3 million.
The opportunities for EU companies, including SMEs, in China are manifold. They include the high potential for growth in the automotive market in China due to increasing incomes and current low rates of vehicle ownership vis-à-vis many Western countries; a growing pursuit of quality as opposed to making purchasing decisions based mainly on price factors; NEV sales increasing in 2021, demonstrating a reversal of the figures seen in 2020; the expanding popularity of sales of used vehicles; the perception that automotive parts from Europe are of a high quality due to the many European brands that have already successfully entered the China market, and the concomitant dominance of European companies in this market; and a demonstrable demand from Chinese OEMs for European parts. At the same, time, there are challenges present in the market, such as the ongoing economic uncertainty caused by COVID, as well as the difficulties in establishing a distribution network and strong reputation in a country as large as China, finding experienced staff, and rising competition from Chinese in-market players.
This report begins with an overview of the automotive and new energy vehicle (NEV) market in China, before moving on to the structure of the market and a deep dive into the NEV market, then a study of both the opportunities and challenges facing EU SMEs in this market.
1. Market overview
2. Market structure
3. NEV market
4. Opportunities and challenges
5. Case study: Wallbox
Disclaimer: This report was published during the EU SME Centre in China Phase II (2014-2020), which was funded by the European Union (ICI+/2014/346-276). The report was drafted in collaboration with external creators, who worked under service agreements with the Consortium running the EU SME Centre Phase II. The copyrights and intellectual property of this publication belong to the Consortium partner China-Britain Business Council. The latter was authorised by and acted on behalf of the Consortium running EU SME Centre in China Phase II. The China-Britain Business Council, which is currently part of the Consortium running the EU SME Centre in China Phase III, has granted the rights of use of this report to the current Consortium. The report is therefore re-published and made available during the EU SME Centre Phases III and IV.