Recently, the topic of “foreign car companies withdrawing from the Chinese market” has resurfaced. The reason is that Stellantis CEO Tang Weishi said it may stop making cars in China.
Image credit: Stellantis Group
At the same time, foreign-funded parts and components companies have successively released signals of “overweighting the Chinese market”, and Webasto, Magna, etc. have successively announced their investment layout in China.
One party is planning to exit the market, while the other is expanding its layout. It seems that foreign-funded enterprises are “running in the opposite direction.”
Two seemingly opposite phenomena
Suzuki, Fiat, Renault, and many foreign auto companies have withdrawn from the Chinese market in the past few years.
This year, there seems to be more of this kind of action.
In April, GAC Honda announced that in order to further promote the implementation of the electrification strategy, GAC Honda will fully integrate the GAC Acura brand resources and join the electrification business. From 2023, GAC Honda will no longer manufacture and sell existing products under the GAC Acura brand. This means that from 2023, the Acura brand will officially withdraw from the Chinese market.
Then in July, Stellantis issued an announcement on its official website saying that because the joint venture company GAC Fiat Chrysler established with GAC Group has been in a state of loss in recent years, and the previously discussed equity change plan of the joint venture company has not progressed, the two parties are negotiating to terminate the joint venture. The operation of the company and the localization of the Jeep brand will be stopped in an orderly manner. In the future, Stellantis will independently sell and operate Jeep products in China through imports.
Relevant announcement; Image source: Stellantis Group official website
Also recently, Stellantis CEO Tang Weishi said that it may stop producing cars in China. As industry insiders have said, if Stellantis really stops producing cars in China, adopts an asset-light model for Peugeot and Citroen, and retains the import business like the Jeep brand, it is equivalent to giving up the Chinese joint venture market completely.
On the other hand, foreign-funded parts and components companies, when the above-mentioned foreign brands exited or were planning to exit, continued to increase their weight in the Chinese market.
On October 21, Gasgoo learned from Magna officials that Magna will establish a joint venture with Guangdong Huatie Tongda High-speed Railway Equipment Co., Ltd. in Qingdao, Shandong Province, China, to provide seating systems for new energy vehicles of contracted customers. solution.
The day before, the Wuhan Branch of Webasto China R&D Center was officially unveiled. It is reported that following the completion of the Shanghai R&D Center in 2004 and the Jiaxing Power Battery Center in 2019, Webasto has made another strategic layout to strengthen its R&D capabilities in China.
Unveiling Ceremony; Image Credit: Webasto
Also on this day, the China Automotive Division of TE Connectivity (hereinafter referred to as “TE”) announced that the first phase of the Kunshan plant was officially put into operation, and the second phase of construction was started simultaneously. The expected production time is 2024. The Kunshan factory is another important layout of TE’s automotive division in the Chinese market after the three major factories in Suzhou.
Moving forward, the new R&D office building of Continental Changchun Technology Center (CCTC) was officially opened, Visteon’s latest Asia-Pacific technology center officially landed in Wuhan, and H-ONE, a Honda component company, also stated that it will establish a manufacturing and sales of pure electric vehicles in China. Subsidiaries of automotive (EV) components and other related events.
In this way, foreign-funded wholesale companies seem to be heading in two opposite directions.
Behind it is the intensification of industry reshuffle
The different practices of foreign-funded whole-organization enterprises, which seem to be opposite, are in fact the same, revealing the intensification of market competition and industry reshuffle.
On the whole, the reasons for the withdrawal of foreign car companies and their desire to withdraw from the Chinese market are simple: the brand’s domestic market position has declined sharply, and sales performance has continued to decline.
For example, the reason why Acura withdrew from the Chinese market is to make way for the new electric brand e:NP, including research and development costs, human resources, etc., but the more important factor is Acura’s continued decline in sales and product positioning.
e: NP brand meaning; Image source: GAC Honda
The reason why Stellantis has repeatedly retreated is obviously closely related to the failure of the domestic market. Sorting out the joint venture brands of Stellantis in China, most of them are delisted or dismal operation as a result, from the early Nanjing Fiat, Beijing Jeep, Beijing Chrysler, to the later GAC Jeep, GAC Fiat, Changan DS, which was once dubbed by netizens ” League of Losers”.
From this point of view, as Cui Dongshu, secretary general of the National Passenger Vehicle Market Information Association, said, the withdrawal of weak foreign auto brands from the Chinese market reflects that the Chinese auto market has entered a phase out of survival of the fittest, and also warns other foreign brands to invest more The energy of product localization and technological innovation.
This is also the reason why other foreign auto companies are eager to strengthen their layout. According to Gasgoo, since the beginning of this year, many foreign auto companies have accelerated the expansion of their production bases in China, and have also strengthened their cooperation with domestic auto supply chain companies. Especially Tesla, which is very popular in the Chinese market.
In September of this year, Tao Lin, vice president of Tesla, said in an interview with the media that the localization rate of the Shanghai Gigafactory industrial chain has reached 95%. Circle of Friends”, forming a whole ecological chain of new energy auto parts, and opening up the national automobile industry chain market, forming a complete “safe, independent and controllable” industrial ecology.
According to the latest news, Tesla recently upgraded the production line of the Shanghai Gigafactory, increasing its production capacity by 30% to about 22,000 vehicles per week. Another latest data shows that in September this year, Tesla added 40 super charging stations and 161 super charging piles in mainland China, which have been launched in 28 cities (counties) across the country. In October, Tesla will also add supercharging stations in many cities including Xi’an, Shenyang, Beijing, Songyuan, Changsha, Zhengzhou, Nanjing, Shanghai, Taizhou, Zhenjiang, Hefei, Wuhan, etc.
In addition to Tesla, BMW has also recently been revealed to invest 10 billion yuan to expand its high-voltage battery production center in Shenyang and expand its investment in battery projects in China. This will be the third BMW Group in the world and the first outside Germany. Complete power battery center. CARIAD, a software company under Volkswagen, has recently formally established a joint venture with Horizon. In the future, it will develop full-stack advanced driver assistance systems and autonomous driving solutions for the needs of the Chinese market.
Volkswagen joins hands with Horizon to form joint venture; Image credit: Horizon
Corresponding to foreign-funded auto companies, there are naturally cases of foreign-funded auto parts companies withdrawing from the Chinese market due to “acclimatization” and other reasons. The market has been deeply cultivated for many years and has a relatively good foundation, so it “lives fairly well”.
Of course, with the transformation of electrification and intelligence, market competition and industry reshuffles intensify, these companies are bound to step up their related layouts. Some industry insiders bluntly said that “without local production, the supply chain will not take you to play”, which is also One of the key reasons for the increase in the actions of foreign-funded parts companies.
Although the Chinese market is not mandatory, it is preferred
Is the Chinese market a must for foreign-funded enterprises? Obviously not. Although some of these companies “earned a lot less” by leaving the Chinese market, they still proved that “they are not without the Chinese market”.
In addition, we also have to admit that foreign-funded OEMs are now expanding their presence in many markets around the world. In other words, they are not “only favoring” the Chinese market.
In the near term alone, BMW announced that its Leipzig, Germany manufacturing base will add eight production lines by 2024 to increase battery capacity, Mercedes-Benz signed a raw material supply agreement with Canadian lithium material supplier Rock Tech Lithium Inc, and General Motors It was revealed that the Changwon plant in southern Seoul, South Korea, will be upgraded. After the upgrade is completed, the company’s annual production capacity in South Korea will be increased to 500,000 vehicles.
Image credit: BMW Group
In fact, even Chinese companies are accelerating their presence in markets outside of China.
From the perspective of independent car companies, today, in addition to pursuing the growth of export volume, they have also begun to innovate in product quality, service, business model, etc., and have built R&D centers and factories overseas to realize the export of simple products overseas. Localized production mode conversion.
Take Great Wall Motors as an example. In September this year, it signed a memorandum of intent for KD assembly (parts assembly) with its partner in Kazakhstan, Astana Motors, to further develop the Kazakhstan market. Previously, Great Wall Motors also built KD factories in Ecuador, Malaysia, Tunisia, Bulgaria and other countries, and its wholly-owned factory in Tula, Russia was also completed and put into production as early as 2019.
Among the independent parts companies, in addition to the companies that have gone overseas earlier, many power battery companies such as Ningde Times, Yiwei Lithium Energy, and Envision Power are also speeding up their efforts to go overseas. The new technology company Sagitar Juchuang also recently announced the establishment of a North American headquarters.
Sagitar Juchuang North America Headquarters opened; Image source: Sagitar Juchuang
In a word, the Chinese market is neither a must-have nor an exclusive choice, but there is no doubt that the Chinese market is more preferred due to the competitive advantages of the core supply chain such as complete industrial facilities, huge market space, and high labor productivity. Compared with the few foreign-funded enterprises that have left, many more enterprises are proving with practical actions that the Chinese market is an extremely critical part of their global layout.
Tesla, for example, has set a goal of producing 20 million electric vehicles a year by 2030, well above its production of just under 1 million in 2021, and according to Tesla chairman Robyn Denholm, the Chinese market is the real deal. key to this yield goal.
In BMW’s strategy, the weight of the Chinese market is also increasing. Zipse, chairman of the BMW Group, mentioned at the beginning of this year that it will continue to move towards higher goals in China.
Schaeffler Nanjing plant; Image source: Schaeffler
Many foreign auto parts companies such as Schaeffler also regard the Chinese market as the focus of the future. Chen Xiangbin, President of Schaeffler Greater China Automotive Technology Division, said in an interview with Gasgoo recently that looking at the entire Chinese automotive industry, especially the demand for new industries driven by new energy, will be huge in the next few years. For Schaeffler, what needs to be done will not only be the expansion of production bases, but will also further expand investment in research and development, production lines, equipment and other aspects of new technologies on the basis of stabilizing traditional businesses as much as possible.