Impact of China on Automotive Sector, 2021 Update – Thematic Research
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China is the pre-eminent market in the automotive space and its importance to the automotive sector is transformative in many ways. While the market peaked at 28.3 million in 2017 – having grown from just 6.3 million in 2007 – there remains room to grow in the market. The sheer size of the opportunity means that most of the established order of automotive OEMs and suppliers are established in the country. However, the sheer size of the market has also been an incubator for several companies that are beginning to flex their capabilities on the international stage.
In COVID-19 impacted 2020, China’s light vehicle market accounted for nearly 31% of the global market and was found to be the single biggest vehicle market in the world. With COVID-19 changing 2020’s market optics, it’s worth considering that pre-2020 China was also a fast-growing market. While the global light vehicle market (excluding China) grew at a CAGR of more than 2% in the 2010-2019 period, China’s light vehicle market recorded a CAGR of more than 6% over the same timeframe.
What are the market dynamics in China’s automotive sector?
Despite a market slowdown prior to COVID-19 impacting, China’s market still represents the most significant volume opportunity for the world’s automotive companies. Presently, the market has not even reached 40 million which is the point at which many industry observers believe will represent market maturity. Therefore, those best-placed in the Chinese market are well-placed to outperform their peers.
Also, due to China’s dynamic tech sector, the country is well placed to lead developments in the CASE (connected, autonomous, shared and electric) megatrends. Here, companies like Baidu, Didi Chuxing and Nio are in the frontline of developments.
What are key trends impacting the automotive sector in China?
Relaxation of ownership restrictions
In April 2018, China’s National Development and Reform Commission (NDRC) announced a five-year phasing out of foreign ownership restrictions in the auto sector. Restrictions on NEV and special-purpose vehicle joint-ventures had already been removed earlier in 2018, with commercial vehicles following in 2020 and passenger cars by 2022.
Booming middle class to drive consumption
Household consumption expenditure is expected to grow by an average 9.8% annually over the 2018-2022 period driven by increasing employment, a booming middle class and a rise in income levels. Moreover, migration from rural to urban areas is also elevating numbers of middle-class households.
Growing demand for personalized product
Companies are increasingly developing premium and personalized products and services to influence purchases.
SUVs everywhere
The SUV is now ubiquitous on driveways and highways throughout the world. A combination of continuing low oil prices, improved fuel economy technology, a safe-feeling and ostentatious seating position, a switch to car-based platforms from old-school ladder frames. In China, SUV penetration increased to 44.9% in 2019 from 12.4% in 2010.
New energy vehicles
After a slow start, the Chinese government launched a policy of promoting New Energy Vehicle (parlance for pure EVs [BEVs] and plug-in hybrids [PHEVs]) market growth and technology adoption to give the domestic auto industry ‘a great leap forward’.
Which are the leading automotive companies in China?
Leading automakers in China include Volkswagen, General Motors, Geely, SAIC and Great Wall while leading suppliers include Yanfeng, BYD, CATL, Faurecia and Denso.
Market report scope
Leading Automakers | Volkswagen, General Motors, Geely, SAIC and Great Wall |
Leading Suppliers | Yanfeng, BYD, CATL, Faurecia and Denso |
Scope
- This report is part of GlobalData’s ecosystem of thematic investment research reports, supported by our “thematic engine”.
Reasons to Buy
- Detailed trends of China’s automotive market.
- Industry analysis for further understanding of the market
- Sector Scorecards to help predict leading companies within each sector
Table of Contents
Frequently asked questions
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What is the market size of light vehicles in China in 2020?
The market for light vehicles in China was 23.2 million in 2020.
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Which are the leading automakers in China?
Leading automakers in China include Volkswagen, General Motors, Geely, SAIC and Great Wall.
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Which are the leading auto-part suppliers in China?
Leading auto-parts suppliers in China include Yanfeng, BYD, CATL, Faurecia and Denso.
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Which are the leading CASE (connected, autonomous, shared and electric) companies in China?
Leading Chinese companies working on CASE trends include Baidu, Didi Chuxing and Nio.
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