As China's automotive market, the world's largest, swiftly transitions towards electric vehicles, homegrown brands are leaving international competitors behind. The upcoming Shanghai Auto Show, starting Tuesday, will showcase a dramatically altered landscape compared to the 2021 event, held under strict COVID-19 restrictions.
The most significant shift is the dominance of Chinese brands, like BYD (002594.SZ), in critical segments, fueled by the adoption of new electric vehicle (EV) models that are gaining traction domestically and globally. BYD will unveil a budget-friendly EV hatchback and a higher-priced SUV-styled EV at the Shanghai show.
This year, BYD's sales in China have soared nearly 69%, securing an 11% share of the overall car market, surpassing Volkswagen (VOWG_p.DE) and Toyota (7203.T), based on sales data analysis. Bill Russo, founder of consultancy Automobility, highlighted the growing divide between market leaders and laggards, stating, "And there are very few winners and a whole lot of losers."
Although China's passenger car sales dipped 13% in the first quarter, EV and plug-in hybrid sales, where Chinese automakers led by BYD dominate, surged 22%. Conversely, internal-combustion vehicle sales dropped by a similar margin. This situation spells trouble for global brands like Volkswagen, General Motors (GM.N), Honda (7267.T), and Nissan (7201.T), as both sales and market shares dwindle.
More than 40 auto brands have reduced EV prices since January, following Tesla's lead, fueling a price war that has boosted sales of EVs and plug-in hybrid electric vehicles (PHEVs) - collectively known as "new energy vehicles" in China. However, this move has also impacted industry-wide profits.
China's entry-level passenger car market, previously ruled by combustion-engine vehicles produced by global automakers in partnership with Chinese brands, has experienced a decline in gasoline-only car sales. In contrast, EV and plug-in hybrid sales have risen substantially.
In China's premium segment, electric-drive cars are already top sellers. BYD has a strong foothold in the plug-in hybrid market, with over half of its sales this year from plug-in hybrids, granting the company the scale to compete on price across its product range.
China's fast-growing exports, driven by EVs and PHEVs, pose an additional challenge to established brands. BYD, which sells its vehicles in Europe and Southeast Asia, experienced a 13-fold increase in exports from China.
