“Chinese car” no longer necessarily rhymes with “low-cost”. Indeed, Chinese manufacturers who set up shop in Europe present their models at prices very close to those of “traditional” manufacturers and, therefore, sometimes very far from the prices practiced in their local market.
In the collective imagination, a car” Made in China is not necessarily a guarantee of quality, the Middle Kingdom still has trouble letting go of its old demons, that a product made in China is less qualitative than a product made elsewhere. But that’s changing, as we’ve seen recently with Aiways and their U6 that highlights the ” Made in China“.
It was true, there was a time, especially for certain industries like textiles or electronics, but it’s less and less. Many manufacturers now produce in China for the European market, and the design differences are no longer necessarily obvious.
The end of low-cost goods in China?
When it comes to a product from a Chinese manufacturer, made in China, prejudices run wild. And even if they are sometimes justified, of course, as we were able to do at the last Paris Motor Show, where Chinese manufacturers were present in large numbers, Chinese cars no longer have much to envy to European or American manufacturers in certain respects..
Producing in China is, above all, minimizing production costs and thus maintaining prices. But this saying is less and less true in the current context, and this is true even in the automotive industry where one would think that a Chinese electric car is less expensive than its European equivalent, but in some cases, it is not!
Of course, there are counter-examples, starting with the formidable MG4 that we were able to test recently and which is on average 40% cheaper (from €22,990, minus bonuses) than a Renault Mégane E-Tech or a Volkswagen ID.3. One can imagine that the Chinese manufacturer is cutting its margins to attack the European market.
But there are also and above all examples that show that certain Chinese manufacturers, in addition to modeling their technologies and know-how on European manufacturers, are presented at substantially equivalent prices.
Prices similar to your European competitors
This is, for example, the case of the manufacturer BYD, which has just announced the prices of its three models sold in Europe. In France, Atto 3 begins € 38,000while the premium sedan and SUV, called respectively Han and Tang, emerge from € 72,000. When comparing prices in China, the Han is sold, for example, approximately the equivalent of 27,500 euros more in Europe compared to the displayed price in China.
With these prices, BYD places itself above the “premium access” segment (Volkswagen, Peugeot, etc.) equipped with an Audi Q4 or a BMW i4 M50. The Han is even displayed above the price of the Tesla Model 3 (which, however, has seen its prices increase significantly in recent months) in its more sophisticated Performance version (from 66,490 euros).
And BYD isn’t the only Chinese manufacturer to showcase its products at the same prices as European manufacturers. Great Wall Motors has recently launched several products in the Old Continent, products also sold in China.
Thus, the Great Wall Wei Pai Mocha PHEV (called “Coffee 01” in Europe) starts from 55,900 euros, against the equivalent of 40,700 euros in China. The Lantu Free, a model sold only in Norway for now, starts at NOK 719,000 (about €67,300 without tax), against the equivalent of €46,000 in China.
How can we explain this price difference?
When a Chinese car arrives in the Old Continent, in addition to the fact that the quality must be at the level of market standardsmust also be imported, as Chinese manufacturers (yet?) do not have factories in Europe. But since Chinese brands choose to go to Europe, why don’t they build factories on our soil, like Tesla?
It is a balance to be found in reality, and if sales progress, manufacturers will not necessarily have any choice but to bring production closer to the market to which they export. not forgetting that governments now want to give priority to models made in their own territory, indexing government aid to the products in question. This has already been the case in the United States recently and, according to recent speeches by the French government, it should also be the case in France in the more or less short term.
Building a factory is obviously expensive, and the market must ensure some stability before considering production on the European market, especially as the costs are not the same. Without forgetting that European legislation is complex, in every sense of the word, and Tesla is certainly not going to claim otherwise with its Gigafactory in Berlin, whose departure from the field was no easy task.
A path full of traps
At the moment, Chinese manufacturers are exporting their models to Europe by sea. Exporting, and the accompanying logistics, obviously has a significant cost, a cost that is directly reflected in the final price. Not to mention that inflation also plays an important role, as export costs are also exploding with rising energy prices.
Chinese cars also face some political obstacles. For example, due to dumping (practice of selling in foreign markets at prices lower than those practiced in the domestic market, or even lower than the cost price), a large number of Chinese products exported to Europe are taxed to avoid this phenomenon.
In recent years, Chinese truck tires and e-bikes have been affected by this tax. Local protectionism then plays an important role in these prices.
However, despite all these “restrictions”, there is still an advantage for Chinese manufacturers to produce in China as the manufacturing costs are much lower compared to the same model made in Europe. For example, the German-made Tesla Model Y was not significantly cheaper than the Model Y exported from China to Europe. There has not been (yet?) a drop in prices, on the contrary.
For Chinese manufacturers, positioning themselves in terms of price relative to European manufacturers, it is also a way of showing that their cars do not have much to envy to what is also done in Europeand which can also register as real alternatives.
It is also a risk to take, as they may also not sell on the pretext that a European model equivalent in all respects is displayed at the same price, and that a European customer will prefer in most cases to move to a more “local” model. ”. ” model.
Europe, a separate market
Overall, the European market is complicated for manufacturers from other continents. Toyota, which has been in control for many years in North America, for example, doesn’t have the same aura in Europealthough its hybrid products are the best sellers.
Honda and Subaru, which are successful in the US and in the local market, are unable to enter Europe and are faced with a market where automotive industrial heritage matters a lot. The only recent stroke of strength, undoubtedly, comes from Tesla and its Model 3, as it was the best-selling electric car on the Old Continent in 2021, taking advantage of its technological advance in relation to European levels.
Chinese manufacturers will therefore have a lot to do in Europe to achieve their goals, and the first goal seems above all to put an end to the bad image that Chinese brands can have in Europe. But it will likely take several decades. Some, like MG, practice low prices, others, like BYD, prefer to follow local manufacturers… Who’s right? Who is wrong? Answer within a good ten years.
In all cases, Chinese manufacturers will likely adopt the same method as Japanese manufacturers for over 20 years. Initially, when Japanese cars hit the European market, they faced the same problem that Chinese cars face today. However, Japanese manufacturers have always managed to make a difference, with the hybrid for Toyota in particular, or even the SUV with the Qashqai in 2007 for Nissan, not to mention the famous Japanese sports cars, which are no longer necessarily relevant today. but which were very successful in Europe in the 90s and 2000s.
Interesting sales figures
According to a report by the NGO Transport & Environment, Chinese manufacturers already account for 5% of all electric vehicles sold since the beginning of the year in Europe. All this without having a multitude of products, since it is MG that offers the most electric cars at the moment. With the arrival of new manufacturers, this number could increase even more, according to the organization. It is estimated that Chinese manufacturers could supply Europe with 9-18% of its electric cars in about two years.
Internationally, Chinese manufacturers will continue to grow. According to Global Dataat the end of the decade, China will account for 60% of electric car deliveries worldwide. Growth is expected to be exponential as the Middle Kingdom is expected to account for 25% of electric car sales worldwide by 2025.
According to a study by Jato Dynamics, one in five electric models sold in Europe are already assembled in China. And yet, just 18% of electric models sold on the Old Continent are Chinese. Because ? For the simple and good reason that some European manufacturers have already transferred their production to Asia, such as Dacia or BMW for some models, for example.
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