Foreign Car Market Share Drops 7.5% in One Year
Impact of Subsidies, Tariffs, and Patriotic Consumption
Withdrawal from Chinese Market Continues... Meanwhile, Localization Accelerates
The Wall Street Journal (WSJ) reported on the 8th (local time) that the market share of foreign automobile manufacturers in China significantly declined in the first half of this year.
According to the China Passenger Car Association, foreign brands such as Tesla, Volkswagen, and Hyundai recorded a 43% market share in China during the first half of the year. This is a sharp drop from 50.5% in the same period last year. During this period, automobile sales in China reached 9.84 million units, a 3.3% increase compared to the previous year.
The Chinese automobile market has recently seen local electric vehicle companies receiving government subsidies expand their market share. Volkswagen plans to launch more than 70 electric vehicle models in China this year, which is expected to lead to a price war impacting both Chinese and foreign brands.
Additionally, the recent imposition of tariffs by the United States and the European Union (EU) on Chinese electric vehicle exports has compounded the situation. Some manufacturers, having overproduced with subsidies, are trying to clear inventory through exports, prompting Western governments to respond with heavy tariffs, escalating tensions. Furthermore, as the quality of Chinese automobile companies improves, Chinese consumers are engaging in 'patriotic consumption' by purchasing domestic vehicles instead of those from foreign manufacturers.
As a result, Tesla's long-standing position as the top seller in the electric vehicle segment has become a thing of the past. According to the China Passenger Car Association, from January to May this year, Tesla fell to third place in the new energy vehicle sector, behind BYD and Geely Automobile.
Major foreign manufacturers are scaling back their presence in the Chinese market. Last year, Japan's Mitsubishi Motors announced it would cease production in China, and Stellantis stopped producing Jeep vehicles in China two years ago. Hyundai sold its factory in Chongqing, China, to a local company. Nissan halted production at its Changzhou plant, and Honda decided to reduce the workforce at its Chinese joint venture.
At the same time, foreign manufacturers are accelerating localization in the electric vehicle sector. Volkswagen has transferred most of the development decision-making authority to its Chinese executives. To absorb local technology, it has invested in Chinese companies such as Xiaopeng (Xpeng) and Horizon Robotics. WSJ also reported that Toyota and Nissan plan to further localize the development of vehicles sold in China.
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