Chinese car companies shake the Munich Auto Show

If the Frankfurt Motor Show, which has a history of over 70 years, represents the glory of the traditional automotive industry, then as a successor, the 2023 Munich Motor Show, which opened last week, shoulders the responsibility of showcasing the current transformation and innovation of the automotive industry to global audiences. This is an important platform to showcase the transformation and innovation of the automotive industry, and also the largest automotive exhibition in Europe and Germany. Here, not only can you see the latest products and technologies of local European brands, but also witness the strong rise of Chinese brands.

More than 50 Chinese enterprises from three major categories participated in the exhibition

According to the official exhibitor information released by the Munich Auto Show, there are over 700 exhibitors at this year's auto show, including more than 50 Chinese automotive industry overseas enterprises, which can be divided into three categories: complete vehicles, battery electric drive electronic control, charging and intelligent automotive electronics, and software.

Among the most popular car brands, besides old acquaintances such as MG and Xiaopeng, there are also "new faces" like Zero Run and Avita.

Specifically, BYD's booth size this time exceeded that of Mercedes Benz, with an area of 915 square meters, making it the largest among all exhibitors. Simultaneously unveiled six new energy vehicles, including the BYD Leopard, Song PLUS EV Championship Edition, Yuan PLUS, Leopard, Han, and Tengshi D9. In addition to BYD, Zero Run Motors also gained a lot of attention at this year's Munich Auto Show, not only releasing the latest 8-year self-developed LEAP3.0 technology architecture, but also releasing the first global model C10 based on this architecture.

At the same time, Xiaopeng Motors also made its debut at this globally renowned international auto show with the Xiaopeng G9 and international version P7i, and announced that it will debut in the German market in 2024, as well as more global strategic planning. On July 26th of this year, the news of Xiaopeng Motors and Volkswagen's strategic technology cooperation caused a sensation worldwide and aroused strong attention.

The new independent brand Avita, established by three giants: Changan Automobile, CATL, and Huawei, unveiled its second model, the Avita 12, at this year's Munich Auto Show. This not only demonstrates its importance and expectations for the European market, but also demonstrates its hope to further expand its brand influence and market share through this model.

As one of the best-selling Chinese car brands in Europe, SAIC MG naturally won't miss the opportunity to showcase its strength. At this year's Munich Auto Show, it unveiled three heavyweight new cars, namely the MG Cyberster, MG4 Electric XPOWER Performance Edition, and electric SUV MarvelR.

European companies increasing investment in China

Chinese brands have completed the role transition from "participants" to "protagonists" at the Munich Auto Show, demonstrating their leading strength in the "birthplace of automobiles" with a powerful posture. And the manifestation of this strength is mainly concentrated in the field of new energy. At present, China is already the world's largest market for new energy vehicles and also the world's largest manufacturer of new energy vehicles. The rapid progress of Chinese brands in electrification and intelligence has shown the European market their determination and confidence to go global.

The Munich Auto Show naturally does not lack the participation of traditional giants. Local German automakers such as Volkswagen, Mercedes Benz, and BMW have all made appearances, bringing the latest models and technologies. A group of executives also attended the event to express their latest views on the transformation of new energy and industry development. And Volkswagen Group has brought a slogan of "serving China in China" to its hometown, and specially showcased Chinese partners such as SAIC, Xiaopeng, and Horizon, emphasizing the continued increase in investment in China and working with Chinese companies to develop more suitable new technologies.

Volkswagen Group CEO Obom stated that "Volkswagen Group has developed a clear plan to give greater autonomy to the China region to achieve a more agile decision-making process.". Obom also stated that the Chinese and North American markets will become engines driving future sales growth, and the Chinese market is full of special challenges. Currently, there is no region in the world where the transformation of the automotive industry is as significant and rapid as the Chinese market.

And luxury car companies have also let go of their lofty positions. Mercedes Benz CEO Kang Linsong said, "The global economy is facing challenges, but this will not change our long-term commitment to the Chinese market. We will continue to expand our investment in the Chinese market."

Going to sea is not a smooth journey

For Chinese brands, although they have gained a leading advantage in competition with some foreign car companies using more advanced technology, they still face multiple challenges in achieving greater breakthroughs in the European market.

The first issue is brand awareness and consumer trust in the brand. In recent years, SAIC Motor Corporation has gained numerous consumer benefits through MG's popularity in Europe, which is not applicable to every enterprise. European consumers always maintain a skeptical attitude towards new brands and models they are unfamiliar with, and there are still stereotypes about Chinese manufacturing.

Secondly, cost and logistics issues will also constrain the pace of Chinese companies going abroad. Logistics, sales tax, import tax, and compliance with EU regulations and certifications will all increase costs. The process of transporting cars from China to various distribution points in Europe through busy ports is complicated and the delivery time is long. Generally speaking, a roll on/roll off ship departing from Shanghai Lingang needs to drift at sea for nearly a month and a half to reach the port of Rotterdam in the Netherlands, Europe.

More importantly, the European market is highly diversified, with significant differences in demand and taste among users from different countries and regions. For example, in the Nordic region, consumers are more inclined to purchase high-end, luxurious, and safe electric vehicles, which is also the reason why new energy brands such as NIO and Xiaopeng choose it as their first stop in Europe. In the southern European region, consumers prefer small, affordable, energy-saving and environmentally friendly electric vehicles. Therefore, in order for Chinese brands to succeed in the European market, they must fully understand and meet the needs and preferences of European consumers.

Of course, opportunities always coexist with challenges, and there are also opportunities in the European market. Firstly, the demand for electric vehicles in the European market is growing rapidly, driven by policies and environmental awareness. The acceptance and willingness of European consumers to purchase electric vehicles are also constantly increasing.

Secondly, it is important to choose a good mode. The key to SAIC's sustained rapid growth in sales in Europe and even the global market is the creation of a differentiated path for Chinese automotive companies to go global. As China's first systematic, planned, and established automobile enterprise to "go global", SAIC has established a full value chain for the automobile industry overseas, including innovation research and development centers, production bases, marketing centers, supply chain centers, and financial companies. Its products and services have entered more than 90 countries and regions worldwide.

In 2022, SAIC became the first Chinese automobile company to achieve overseas annual sales exceeding one million, forming a "100000 vehicle level" in Europe and five "50000 vehicle level" overseas regional markets in Australia, New Zealand, the Americas, the Middle East, ASEAN, and South Asia. This year, SAIC's overseas sales are expected to reach 1.2 million vehicles, and Europe will advance to SAIC's first "200000 vehicle level" overseas regional market.

Finally, Chinese brands can also accelerate their layout in the European market through technology exports and partnerships. Not long ago, Volkswagen Group announced in-depth cooperation with Xiaopeng and SAIC, both of which will jointly develop two electric vehicle models for the Volkswagen brand based on the Xiaopeng G9 platform; Jetta and Zero Run have also been rumored to be holding hands. These collaborations can not only help Chinese brands increase their visibility in the European market and the trust of European consumers in Chinese brands, but also help them reduce costs and risks, improve efficiency and efficiency.