The Chinese have a knack for thoroughly planning their products and market strategies well in advance, and they follow through on these plans with impressive consistency. This disciplined approach has made them a powerful force, leaving many affluent nations scrambling to catch up and resorting to questionable tactics to try and slow their progress. Motoring journalists reckon this giant presents a significant challenge that will be hard to overcome.
By Dumi Xaba
Years ago, Chinese cars were often just copies of models you would see on the streets. They were known for their lack of reliability, and finding replacement parts was quite a hassle. However, things have changed significantly. Brands like Cherry and Haval now offer dependable, affordable, feature-rich, and well-assembled cars.
Before any Chinese model hits the market, a substantial inventory of parts is stocked, ensuring a smooth launch…
Unlike some German and British cars that may require up to eight months of waiting, many Chinese vehicles are mass-produced in advance, giving them a competitive edge over traditional manufacturers.
Recent statistics indicate that Ford has managed to stay afloat primarily due to its sales of bakkies and electric vehicles.
The West’s aggressive stance against competition has previously led to accusations that Chinese products are tools for government surveillance. Despite these claims, many continued to place orders with Chinese manufacturers. In 2024, a significant increase in tariffs was announced, raising the tax from 25% to a staggering 100%. Nevertheless, this did not deter Chinese electric vehicle exports, which surged by an impressive 70%.
This surge has provoked frustration in the West, prompting a return to the George Bush-era approach of demanding allegiance—either you stand with us or against us. European nations were urged to restrict Chinese goods, a challenging task that risked undermining their goals of reducing carbon emissions. The European Union received directives that felt like a command from a dominant ally. Ultimately, they faced the dilemma of risking a trade conflict with China, leading to a steep increase in tariffs, which rose from a 10% euro duty to rates ranging from 17.4% to 38.1%.
The European Union has raised concerns that Chinese electric vehicles are priced artificially low due to government support in the form of subsidies. Beijing has rejected this assertion. In response, an investigation was initiated, targeting all Chinese electric vehicle manufacturers, while excluding Western products that may also receive state assistance.
Under the U.S. Treasury’s Section 30d, purchasing an electric vehicle could yield tax credits of up to $7,500, provided the vehicle’s batteries and components are not sourced from countries deemed problematic. This situation highlights the complexities of state subsidies and reflects a double standard in policy enforcement.
Fight For Survival
Numerous manufacturers have adopted a collective strategy, believing in the strength of numbers. A prime example is the Stellantis group, which encompasses a diverse range of brands including Alfa Romeo, Citroën, Fiat, Jeep, Opel, Ferrari, Peugeot, Maserati, Ram, Abarth, Chrysler, and Vauxhall. This approach emphasizes the importance of diversification to ensure long-term survival.
Toyota Motor Corporation, the top seller in the automotive industry, is known for its steadfast commitment to durability and reliability. The company is deliberate in its approach to introducing new models, often taking its time to ensure quality. This strategy contributes to the impressive resale value of its vehicles.
As the second-largest car manufacturer, VW Motor Corporation has crafted a smart approach to the market. They evaluate consumer preferences and move away from models that fail to resonate. In our country, the demand for SUVs overshadows sedans, meaning we see fewer Jettas on the roads. Conversely, some countries have a strong affinity for sedans, which is why they have access to the Jetta and other models that we do not. Furthermore, while estate cars are a hit in Europe, they do not appeal to us, leading to the absence of models like the Passat Estate that are popular overseas.
The Hyundai Motor Corporation, a relatively new entrant in the automotive scene, has embraced a successful formula that prioritizes affordability without compromising on quality. They distinguished themselves by introducing a million-kilometre engine warranty, which has been widely interpreted as a testament to their confidence in the durability of their cars.
In my opinion, the Chinese automotive companies have mirrored the above approach, also drawing inspiration from various brands to create a composite strategy that appeals to consumers. With all their components sourced domestically, they have become a significant force in the market, gaining popularity while also instilling a sense of concern among competitors.
Blood On The Automotive Floor
Mercedes and BMW, known for their innovative strategies and high-priced optional extras, are encountering fierce competition from Chinese car manufacturers. Notably, BMW’s X7 bakkie never reached consumers, and the high-priced Mercedes X-Class, based on the Nissan Navarra, struggled to find its place in the competitive bakkie landscape.
Production of the X3 will come to an end at the Rosslyn plant, which will now focus on creating a new plug-in hybrid model.
BMW has reported a 1.3% drop in sales, attributed to a slowdown in demand from China that has resulted in significant revenue losses. Mercedes is facing similar challenges, as it has noted that declining interest from Chinese consumers has led to a fall in sales and market value. Increasingly, Chinese buyers are turning to their own high-quality vehicles, which are not only well-made but also much cheaper to maintain than the often costly German models.
According to the German publication Handelsblatt, Mercedes Benz models such as the GLE coupe and GLC coupe are gradually being phased out. These vehicles may soon be replaced by a new model, possibly named the CLE class. While some wish for a revival of these coupes in a more desirable format, the reality is that in the business world, emotional ties do not translate into sales figures.
The E-class coupe, along with the CLS and C-class coupe, is also under threat of discontinuation, with plans to unify them into a single model in the future. The over-engineering trend that Mercedes embraced in the 1990s has led to their luxury limousines becoming expensive yet commonplace, which could adversely affect their market value.
China Revs It Up
The Chinese have a knack for planning their products and market strategies well in advance, and they consistently follow through on these plans. This discipline has made them an unstoppable powerhouse, leaving many wealthy countries scrambling to catch up and employing dubious tactics to try to slow them down. From the viewpoint of motoring journalists, this is a giant that poses a significant challenge and will be hard to stop.
Meanwhile, many car manufacturers are channelling their efforts into innovative and appealing products to win over consumers. This dynamic is incredibly exciting for car buyers.