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Global automakers are gathering this week at the Shanghai Auto Show. The biggest car market in the world is facing an unknown collapse in sales, while China is moving towards a highly competitive electricity future.
Fueled by rising revenues and government trade incentives, China has been the golden goose on which the global auto industry has bet on its future.
But after years of strong growth, car sales have fallen for the first time since the 1990s, hit by the slowing economy, trade tensions in the US and Chinese crackdowns by dubious credit practices that have undermined auto finance channels.
Sales fell 2.8% in 2018 to reach 28.1 million units, according to the China Automobile Manufacturers Association (CAAM), a pace that has accelerated over the past two years. last months.
"This is the first time since the takeoff of the Chinese market that sales are falling so long and so abrupt," said Laurent Petizon, automotive analyst at Alix Partners. "We are starting to worry a bit, it's a new phenomenon."
The decline is magnified by a rush to previous purchases as consumers tried to oppose the government's recent removal of tax cuts for small car purchases.
Leading automakers are still seeing solid potential, particularly in the most enlightened locations such as SUVs and electric vehicles, which will represent many of the new models on display in Shanghai. But fierce competition is expected to intensify even in electric vehicles, Beijing is preparing to phase out policies encouraging the purchase of "green" vehicles.
This mixed picture – optimism associated with worrying new realities – is reflected in the plans of automakers such as Ford. The US manufacturer announced this month its intention to launch 30 new models in China within three years, including a dozen of electricity. But he also unveiled a strategy to respond more directly to the evolving needs of Chinese car buyers.
This includes the integration of Chinese Baidu's artificial intelligence technology into Ford vehicles, giving more freedom to Ford's Chinese joint ventures in terms of design choices and other milestones.
Although China is the largest "new energy" vehicle market in the world and sales climbed 62% last year, they remain a drop in the Chinese basket with 1.3 million units sold, partly through incentives to purchase.
But they represent the future of China, especially when the government plans to impose quotes on car manufacturers who must keep a certain percentage of new energy vehicles in their Chinese production.
This has prompted a number of young Chinese EV companies to conquer a territory that will have to face groups like Tesla.
The Californian manufacturer, widely regarded as the EV normalizer, is putting more and more eggs in the Chinese basket.
Tesla chief Elon Musk inaugurated a factory in Shanghai in January – the company's largest move to date. The new plant will eventually have an annual production capacity of 500,000 vehicles, which will significantly increase Tesla's production.
Preferring increased competition, Beijing is committed to opening up its market, thereby removing the requirement for foreign manufacturers to form manufacturing joint ventures with Chinese partners.
The planned Tesla factory would be the first to take advantage of it.
Regardless of short-term market struggles, China will remain a crucial market, especially in the electricity sector, said Ferdinand Dudenhoeffer, director of the German-based Center of Automotive Research.
"The situation will improve slowly, and next year the market will recover gradually and in three or four years it will resume its initial growth," he said.
© 2019 AFP
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