Shanghai (AFP) – The world’s biggest auto show opens Wednesday in Shanghai, with foreign carmakers raring to show they can compete against the ultra-competitive Chinese firms that dominate the sector’s new electric frontier. As the petrol engine’s primacy stutters, traditional industry expos like Paris and Detroit are scrambling to re-invent themselves — but in Shanghai, the era of cleaner engines and AI-powered operating systems will be very much on display already. The government’s historic backing of EV and hybrid development means China is now leading the charge in the sector. In 2024, EVs and hybrids made up 26% and 19% respectively of total car sales in the country, according to Inovev.
“It’s the only country that manages to get the automobile sector’s industrial giants cohabiting with the innovation of a multitude of startups — operational excellence and (production) volume with innovation and daring,” Deloitte analyst Guillaume Crunelle told AFP. Auto Shanghai, which runs until May 2, will see a flurry of launches for electric, high-tech new models — luxury SUVs, saloons, and multi-purpose vehicles — all designed and built in record time. Dozens of brands will take part, from state-owned behemoths to start-ups such as Li Auto and Xpeng, tech giants with skin in the game like Huawei, and consumer electronics-turned-car company Xiaomi.
Analysts consider the Chinese market to be the world’s largest, younger-leaning, and more open to novelty. But it is also fiercely cutthroat. Some start-ups have already gone bust, while brands including SAIC Motor, BYD, and Geely are engaged in a brutal price war. Reports that two of China’s largest state-owned auto enterprises are planning to merge suggest the government is pushing companies to consolidate, eliminating inefficiencies to create new global leaders, analysts say. “They are in a phase of rationalisation and simplification directed by the state,” Crunelle said.
Many companies are also looking to expand overseas, in the hope that increased sales in markets including Southeast Asia, Europe, and Latin America will safeguard their future.
– German Woes –
Foreign carmakers have also found themselves caught out by the new market conditions, none more so than the Germans. After years of market domination in China, Volkswagen, BMW, and Mercedes have seen sales fall as domestic brands’ stars have risen. Volkswagen is hoping to bounce back at this year’s show with three vehicles developed in and for China, a first for the German group, as well as an advanced autonomous driving system. Volkswagen’s China chief Ralf Brandstatter told a German newspaper that foreign manufacturers still had a card to play in China, as Beijing is betting “once again more on foreign investment” as its economy slows.
Faced with “an extreme price war,” the group had decided to “remain profitable” at the expense of sales and market share, he said Saturday. The group aims to revitalise itself through cost-cutting, helped by a partnership with China’s Xpeng. In Shanghai, German manufacturers will have to prove “they are at the cutting edge of innovation…if they want to even retain their current market share,” analyst Stefan Bratzel told AFP. It is already too late to regain their past market supremacy, he added, echoing comments made by former Porsche CFO Lutz Metschke.
German carmakers cannot give up entirely on China, though, especially with looming uncertainty caused by Donald Trump’s threatened tariff rises on European countries. The US president’s policy has wreaked even more havoc on US-China trade, with the countries at an impasse over staggeringly high reciprocal duties. One of the biggest US companies active in China, Tesla, will not be attending Auto Shanghai, despite its two massive factories in the city. Elon Musk’s EV giant has not exhibited at a major car show in China since 2021, when a one-woman protest over an alleged brake failure went viral on social media. However, US brands including Cadillac, Buick, and Lincoln will still present at the show, with most models on display produced and sold locally.
© 2024 AFP
