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Chinese Electric Vehicle Force Sets Sight on European Market
The dominance of European car makers in China that started in the 1980s is now being challenged as Chinese electric vehicle (EV) powerhouses gear up to infiltrate the European market.
China’s Big Push
Respected electric vehicle companies in China, such as BYD, Chery, and Great Wall Motor (GWM), are gearing up for an aggressive expansion into Europe. As per Reuters, these companies are launching approximately 20 new products in the next five years and significantly boosting their marketing and sales efforts.
After gaining a substantial market share in their domestic market, these Chinese EV giants are ready to compete in Europe, the most crucial export market for them.
European car buyers’ preferences have been thoroughly observed over the years by Chinese EV manufacturers. They have also employed industry professionals and chosen distributors with comprehensive local knowledge. All this makes them well equipped to battle not only Tesla, but also the established automakers in Europe.
Chinese Brands Seek Acknowledgement
Chinese automakers are actively employing different tactics to breach the European market. They are sponsoring high-profile sporting events to enhance brand recognition, improving their dealership networks and service-and-repair operations to safeguard resale values, which is a crucial requirement for fleet buyers who form a large segment of the European market.
In spite of these strategies, their sales remain nominal due to lack of brand familiarity. However, growing deliveries and availability of more models across various price ranges could lead to a surge in sales.
The Advantages of Low Cost
Chinese auto industry holds a significant cost advantage, due to its state support and domination in the battery-minerals refining industry. In fact, the substantial cost advantage has sparked a price war in the Chinese EV industry, particularly with BYD, leading to an abundance of electric vehicles priced between $10,000 and $30,000.
These low prices have raised concerns among auto industries and politicians in US and Europe. While US has increased its tariffs on Chinese EV’s, the European Union is currently investigating subsidies by China and could soon impose higher tariffs on Chinese vehicles.
Investing For The Long Haul
With their expansion plans, Chinese automakers are working on intricate strategies to solidify their appeal to the European customers. Safety ratings have been improved, distribution strategies have been streamlined and repair and service operations have been fortified to bolster resale values, a key consideration for lease customers.
Bo Yu, Manager at JATO Dynamics, a UK-based auto research firm, commented on the careful planning of Chinese automakers. He stated that these manufacturers are diligent in understanding the European market and have adapted their strategies to meet the total cost of ownership, including maintenance, service and residual values of the cars.
The Need For Brand Visibility
Despite working on various fronts to enter the European market, Chinese automakers face a major challenge in their journey – building brand recognition. This could buy some time for established European automakers to safeguard their markets.
To boost their brand presence, Chinese automakers are using social media, sponsoring high-profile events, and partnering with existing dealer networks. Furthermore, plans are in place to expand their dealership networks rapidly, aiming to have physical locations within 14-minute drives for most European residents.
The awareness of Chinese cars is gradually increasing. As per research conducted by Carwow, 50 percent respondents in Germany would consider a Chinese car compared to just 27 percent in October of the previous year.
Undeniably, Chinese automakers are making giant strides in the European market, but only time will reveal how successful this push will turn out to be.
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