Korean Media: Will Domestic Brands Dominate China’s Market, Pushing Joint Venture Cars’ Share Below 20%?
On August 16, South Korea's daily newspaper Business Korea published an article stating that, as of June this year, the monthly market share of joint venture car brands in China stood at 24.5%. Although not officially released yet, it is expected that the market share for July will further decline, possibly falling below 20%.
Data released by the China Association of Automobile Manufacturers shows that from January to June this year, domestic brand passenger vehicle sales reached a cumulative total of 9.138 million units, accounting for 71.8% of the market share. In contrast, joint venture brands held a market share of 28.2% during the same period.
In 2020, joint venture brands accounted for 61.6% of the market share. This indicates a dramatic reversal in just under six years.
The Chinese auto industry considers 25% as a critical threshold for market share. This means that if joint venture brands fall below 25%, their influence on the market will be minimal.
The reality is that more and more joint venture brands are exiting the Chinese market. Starting with Suzuki in 2018, Guangqi Acura and Guangqi Fiat Chrysler Automobiles also exited China in 2022, respectively. In 2023, Guangqi Mitsubishi completely ceased production and sales of new vehicles.
This shift is a result of the rapid electrification of China's automotive market.
Despite discount rates exceeding 20%, overseas joint venture brands have shown no signs of recovery in sales performance. Since discounting is essentially a method for clearing inventory, even more brands may exit the market.
Li Fenggang, General Manager of Beijing Hyundai Motor, said: “The declining market share of foreign-owned brands isn’t due to a lack of competitiveness among joint ventures, but rather because they have been too slow in transitioning toward electrification.”
During the first half of this year, Hyundai Motor sold only 47,800 vehicles in China, a 20% decrease compared to the same period last year. Its estimated market share was merely 1.6%.
In China, exporting has become a survival strategy for joint venture brands. This approach suggests exporting complete vehicles produced locally in China to overseas markets, leveraging their relatively lower production costs.
Kia’s survival strategy is similar. With a market share in China below 1%, Kia sold a total of 118,000 vehicles in the first half of this year, of which 81,000 were exported abroad. The Kia factory in Yancheng has transformed into a global export hub, with about 80% of its output destined for export.
Changan Mazda has also reduced its role to that of a production base. Currently, Changan Mazda produces the EZ-6 model and exports it to Europe and other regions.
Phrases like “global export center” serve as euphemisms, marking the end of an era when cars were sold in China primarily through technology and brand marketing.
Original source: toutiao.com/article/1873680285345930/
Disclaimer: The views expressed in this article are solely those of the author.