Car factory | Image: Unsplash
Optimistic outlook: Analysts at UBS say Chinese automakers are on track to improve profitability in 2024 even as competition intensifies in the world’s broadest auto market. This optimistic outlook is driven by significant improvements to the electric vehicle (EV) portfolio.
Paul Gong, lead analyst for China Automotive at UBS, highlighted that the average selling price (ASP) of Chinese branded cars has seen a notable rise over the past few years. This trajectory is expected to continue this year with high-single-digit increases, which will narrow the price gap with international brands.
Gong further pointed out that Chinese brands are expected to capture 63% of the market share in 2024, up from 56% a year ago. This surge in ASP is expected to increase revenue by his 30% and allow Chinese brands to account for his 41% of China’s passenger car industry profits.
This represents a significant change from the market position of Chinese brands, which accounted for just 10% of profits in 2019 and 17% in 2022, according to Gong’s insights. He pointed out that the inability of foreign brands to introduce attractive EV products in China is steering Chinese luxury car consumers towards domestic EV alternatives and German gasoline-powered cars.
Declining market power of international brands
This evolution of the situation reflects the strategic strategy of Chinese automakers such as BYD, Great Wall Motors and Geely to establish themselves in the luxury market segment and erode the dominance previously enjoyed by international brands. are doing.
Chinese car brands have traditionally been constrained by low pricing, but they have made great strides. In 2023, several models from these brands priced at 150,000 yuan or more will have monthly sales exceeding 10,000 units.
Conversely, Japanese brands will face major challenges in the future. UBS’s forecast shows a significant decline, with Japanese brands’ sales and profit share expected to decline from 2022 levels to 9% and 19%, respectively, in 2024.
(according to Reuters information)