Lessons to learn from the 2024 Beijing Motor Show
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Lessons to learn from the 2024 Beijing Motor Show
The Beijing Motor Show has become over the years the most important global motor show, far surpassing the influence of traditional shows such as Paris, Munich, Geneva, Tokyo or Detroit which have gradually become regional shows. While these traditional shows are increasingly neglected by carmakers, the Beijing show welcomes all Chinese carmakers (more than a hundred brands) as well as most foreign carmakers established on Chinese soil. However, we note the absence this year of the 14 brands of the Stellantis group which has certainly almost completely disappeared from the Chinese market. What is interesting about this Beijing 2024 show is not so much the profusion of new vehicles presented by a hundred different Chinese brands, but the trends that we can highlight.
1. First of all, Chinese carmakers, who now represent 60% of passenger car sales in China, and who do not intend to stop there, were a hit this year at the Beijing show. Foreign carmakers have shown their presence but are in the minority and appear less innovative, constrained in a certain way by their history and traditions.
2. Only Volkswagen seems to want to change the paradigm, by presenting the ID Code concept which announces a completely new design, far removed from the brand's models marketed in China whose sales are decreasing year after year. While Audi, BMW and Mercedes are still resisting, Volkswagen will only represent 8.5% of the Chinese market in 2023 compared to 10% in 2022, 13% in 2020 and 14.5% in 2019. To differentiate its electric models from its thermal models, Volkswagen creates the ID Unyx brand, thus imitating the strategy of Chinese carmakers who create new brands dedicated to electric vehicles to give birth to new and unique brand images not subject to the influence of the brand image of more traditional firms.
3. Other lessons can be learned from the 2024 Beijing Motor Show. Chinese carmakers are working more closely with foreign carmakers to design their models. Thus, Volkswagen collaborates with X-Peng for the design of its future BEVs, JLR (Jaguar Land-Rover) collaborates with Chery for the design of its future BEVs, Mazda collaborates with Changan for its new AZ-6 and Arata, etc… The balance of power has changed.
4. While in the past, it was foreign carmakers who imposed their view and the design of their models on Chinese carmakers, today it is exactly the opposite. This new situation was favored by the fact that Chinese technology is now superior to that of foreign carmakers, whether in terms of design, BEV technology, interior concepts and even PHEV technology, which was very present at the Beijing 2024 show, is increasingly appreciated by Chinese customers, unlike what is happening in Europe or the United States. Their market share in China continues to increase: by 3% in 2021, PHEVs increased to 7% in 2022, 11% in 2023 and 14% in the first quarter of 2024. At the same time, BEVs remained stable at 21% of market share in the first quarter of 2024. Indeed, many Chinese customers have switched from thermal cars to plug-in hybrid in addition to BEVs, as the market share of thermal cars decreased from 67% in Q1-2023 to 62% in Q1-2024.
5. On the other hand, we are also seeing a return of MPVs, numerous at this Beijing 2024 show, while this type of vehicle has practically disappeared from the European market and become marginal in the United States. This is another specificity of the Chinese market and the Beijing 2024 show.
6. Finally, we can note the attractiveness of models designed in cooperation with smartphone carmakers, such as Xiaomi or AITO (Huawei), since these models recorded a significant number of orders during the Show.
Volkswagen and X-Peng join forces in electric vehicles
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Volkswagen and X-Peng join forces in electric vehicles
- Volkswagen and the Chinese X-Peng are joining forces to develop battery electric vehicles. The German carmaker has decided to take a 5% stake in the Chinese carmaker which was founded in 2014 and which specializes in the design and production of battery electric vehicles. In China, the two carmakers will sell approximately the same number of electric vehicles in 2023, or around 150,000 units each. Volkswagen's association with X-Peng will expand the range of battery electric vehicles to B-segment models which will be marketed in China from 2026.
- Volkswagen's battery electric platform currently only covers cars in the C-D-E segments represented by the ID3, ID4, ID5, ID6 and ID7. For the B segment, a new platform is being born to give birth in Europe to the future ID1 and ID2, but the carmaker seems to be choosing another platform for China (which will not developed with Renault).
- This association aims above all to reduce the costs of battery electric vehicles in B-segment in order to obtain the lowest possible selling price.
- Remember that there are currently no battery electric B-segment models either in the Volkswagen range or in the X-Peng range. The targeted models are the BYD Seagull (280,000 sales in 2023) and Wuling Bingo (235,000 sales in 2023) which alone each represent almost twice the total sales of battery electrics Volkswagen or X-Peng . The two carmakers believe that the Chinese market for B-segment BEVs is expected to grow during this decade (vehicles for younger generations or second vehicles for relatively wealthy families).
Chinese carmakers now represent 60% of the Chinese market
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Chinese carmakers now represent 60% of the Chinese market
- Chinese car carmakers continue to progress in their home market at the expense of foreign carmakers. At the end of the first quarter of 2024, they represented 60% of the Chinese market compared to 57% at the end of 2023, 51% at the end of 2022, 45% at the end of 2021 and 40%. % at the end of 2020.
- At the end of March 2024, the situation in the Chinese automobile market is very clear: The Volkswagen group is still the leader but it is closely followed by the Chinese BYD and three other Chinese carmakers take the next three places (Geely, Chery, Changan). The growth of Geely and Chery is spectacular. Geely thus moves from fifth to third place and Chery moves from seventh to fourth place. The former number 2 in the Chinese market, GM Group, gradually fell to seventh place behind Toyota and ahead of Honda. The Chinese Great Wall moved from fourteenth to ninth place.
- In conclusion, Chinese carmakers are taking significant shares formerly occupied by foreign carmakers. This is a radical change from the Chinese customers who are buying more and more Chinese products. Apart from Tesla, foreign carmakers have no chance of stopping this “tsunami”. But the future of Tesla is not 100% guaranteed.
- On the graph here below, we see that most of the sales growth in the first quarter of 2024 came from Chinese carmakers, with the entire Chinese passenger car market having increased by 9.7% during this period.
China and Europe: different number of models – different series levels
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China and Europe: different number of models – different series levels
China and Europe have a very different production structure in terms of passenger cars (PC) production:
- different production quantities
- number of different models
- different serial levels
a) Different production quantities
All motorisations included, in 2023, the volume of Chinese passenger car production is twice that of Europe (EEZ perimeter = Economic European Zone = 33 countries which are EU + United Kingdom + Norway + Switzerland + Turkey + Serbia + Morocco).
In total, within this scope, China produced 26 million PCs in 2023 and Europe 13.8 million.
In total, within this scope, China produced 26 million PCs in 2023 and Europe 13.8 million.
b) Number of different models
In 2023, the number of models in China is 631, or 3 times more than in Europe (212 models).
c) Different serial levels
§ Average serial level.
By dividing the total volume of vehicles produced in Europe by the number of models produced in Europe, we obtain the average production level in Europe. This average production level in Europe is 65,000 vehicles per year (production 13.8 million/212 models).
A similar calculation for China enables us to achieve a result of 41,000 vehicles per year (production 26 million/548 models). A first-level of analysis therefore suggests that the average serial level in China is lower than in Europe. But this is just an optical illusion, due to the fact that China has a large number of very small series models, which artificially lowers the average.
A similar calculation for China enables us to achieve a result of 41,000 vehicles per year (production 26 million/548 models). A first-level of analysis therefore suggests that the average serial level in China is lower than in Europe. But this is just an optical illusion, due to the fact that China has a large number of very small series models, which artificially lowers the average.
§ Serial level of the most produced models.
In fact, to the previous analysis must be added a more detailed analysis taking into account the distribution of models by series levels and in particular the most produced models: see the following chapter concerning the Top 10. On the China side, we observe, all motorisations included, one model produced between 600,000 and 700,000 (Tesla Y), 3 models produced between 400,000 and 500,000 (3 BYD models), 2 models produced between 300,000 and 400,000, 17 models produced between 200,000 and 300,000, 60 models produced between 100,000 and 200,000, or 83 models produced at more than 100,000 units and therefore 548 models produced between 0 and 100,000 units. On the European side, no models are produced above 300,000 units in 2023, but 9 models are produced between 200,000 and 300,000 units, 38 models produced between 100,000 and 200,000, or 47 produced at more than 100,000 units and therefore 165 models produced between 0 and 100,000 units. We then see that the models which are the most produced in China have much higher production levels than those produced in Europe. This difference is further greatly accentuated if we focus on Plug-In vehicles (PIV= BEV & PHEV).
§ The average level of series for the Top 10 China is as follows:
- All motorisations: China: 375,000 per year and Europe: 220,000 per year.
- BEV: China 300,000 per year and Europe: 80,000 per year
- PHEV: China: 200,000 per year and Europe: 40,000 per year
JLR may produce BEVs based on a Chery platform
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JLR may produce BEVs based on a Chery platform
- The JLR group (formerly Jaguar Land-Rover), a subsidiary of the Indian Tata Motors, could produce in the future battery electric vehicles using a platform from the Chinese carmaker Chery, and would thus become the first luxury car carmaker to adopt a Chery platform. It would be a platform of the luxury brand Exeed (multi-segment) belonging to the Chery group.
- Jaguar and Land-Rover already produce cars in a Chinese factory in Chery and it is therefore quite natural that the British group turned to this carmaker to optimize its investments in electric engines. Remember that JLR wants to become a carmaker that will only produce battery electric vehicles in 2030 and that there are only six years left to complete this transformation.
- Obtaining an external platform would make it possible to accelerate the launches of various battery electric vehicles as well as the testing phases. In addition, the choice of a Chery platform would make it easier to adapt the industrialization phase in a factory owned by Chery and JLR at 50% each.
- This strategy, however, raises various questions regarding the positioning of the JLR group's brands. Indeed, Jaguar intends to only produce E and F segment models in the future. Will the Chery Exeed platform be able to meet this expectation? In addition, the platform for the future Jaguar GT 4-door already exists, so why not using this platform on other future models of the brand? Or would the Chery Exeed platform only be used for Land Rover models?