China has emerged as the biggest global producer and buyer of automobiles. It sold 28.9 million vehicles domestically in 2017, more than any other country. These included 24.7 million passenger vehicles and 4.2 million commercial vehicles. The focus of this report is the passenger vehicle market which will see the sale of 35.3 million units in 2032.
Chinese automakers produce a bevy of passenger vehicles, ranging from luxury brands for the developed markets to low-cost vehicles for the developing countries. China is now positioning itself to become a major auto exporter, continuing to shake up the global auto market.
The Chinese government has been very protective of the domestic auto industry, levying high tariffs on imported vehicles and imposing limits on foreign ownership of domestic manufacturing. As the Chinese automakers seek to expand internationally, the government is beginning to lower the tariffs on auto imports as well as relax the ownership requirements on foreign automakers.
Virtually every major foreign automaker has set up shop in China. These automakers are producing vehicles for both the domestic Chinese market and well as for exports to foreign markets. The bulk of these vehicles so far have catered to the domestic market.
As they face fierce competition within their domestic market, and as the domestic market becomes increasingly saturated, Chinese automakers are looking into expanding to foreign markets. To avoid being burdened with high tariffs from other countries that could have a chilling effect on its auto exports, China is moving away from its historical protectionist policies.
During the next decade, not only will Chinese automakers push to sell their vehicles in foreign markets, there will be an upsurge of exports of vehicles from China produced by top foreign auto manufacturers.
The Chinese government has identified the promotion of the electric vehicle industry as a main pillar of its national strategy. China today produces more electric vehicles than the rest of the world combined. The government has set a target of having five million electric vehicles on the road by 2020. By 2025, the Chinese government wants electric vehicles to make up at least a fifth of auto sales within the country.
Due to technical advancements and lower production costs, several Chinese indigenous brands have gained popularity in the China’s automobile market and are aggressively competing against established foreign brands. The Chinese automakers are focused on adding enhancements to their vehicles to make them more competitive on the global stage.
In particular, China is accelerating its efforts to become a world leader in self-driving vehicles. These vehicles are intelligent and connected automobiles that will help improve transport efficiency and help automakers meet energy-saving and emission-reduction targets.