# German automakers fight to defend their turf from Chinese rivals Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-04-20 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: German Automakers at Shanghai Auto Show: Defending Turf Meta Description: German automakers are battling to maintain their position in China's electric vehicle market, facing stiff competition from Chinese rivals at the Shanghai URL: https://financedigest.com/german-automakers-fight-to-defend-their-turf-from-chinese-rivalshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-04-19t170550z2lynxmpej3i0p6rtroptp4autoshow-shanghai-germany-1736814120017-compressed.jpg) # German automakers fight to defend their turf from Chinese rivals SHANGHAI/BERLIN (Reuters) -German automakers have turned up in full force at Shanghai’s Auto Show as they fight to stay on top of consumer trends in the country that will define whether they maintain their market dominance in the electric age both at home and abroad. Their heavy presence – with the entire board of Volkswagen AG and more than 100 VW employees attending, in contrast to Japanese or French automakers – shows they are taking the challenge seriously, said Yale Zhang of Shanghai-based consultancy Automotive Foresight. But with German companies relying on China for a third of their passenger vehicle sales, they also have the most to lose. A lot of features in our cars are inspired by China,” Oliver Zipse, CEO of BMW, accompanied by his sales and technology chiefs, told a news conference, adding that the Chinese [market was ahead of the global](https://www.financedigest.com/global-market-study-on-battery-pack-for-marine-hybrid-full-electric-propulsion.html "Global Market Study on Battery Pack for Marine Hybrid & Full Electric Propulsion") curve. His comments mark the power shift from the combustion-engine age when [German cars](https://www.financedigest.com/german-new-passenger-car-registrations-up-3-in-august-industry-source.html "German new passenger car registrations up 3% in August – industry source") were seen in China as the pinnacle of global engineering, to the electric age when German automakers are learning from their Chinese counterparts who have moved faster on developing technology for electric vehicles (EVs) that sets them apart. Volkswagen executives have said the company’s unrivalled global scale will help it win the race for affordable EVs – but that capacity could turn from a blessing to a curse if [sales dip](https://www.financedigest.com/german-retail-sales-dip-more-than-forecast-in-august.html "German retail sales dip more than forecast in August"), with the market share of China’s BYD Co Ltd surpassing that of the Volkswagen brand’s this year so far. While the battery-electric [vehicle market](https://www.financedigest.com/stellantis-makes-30-billion-euro-wager-on-electric-vehicle-market.html "Stellantis makes 30 billion euro wager on electric vehicle market") share of German automakers in China is rising, it is still miniscule. The combined market [share](https://www.financedigest.com/top-5-players-to-account-for-45-of-global-consumer-appliance-coatings-market-share-through-2031.html "Top 5 Players to Account for 45% of Global Consumer Appliance Coatings Market Share Through 2031") of the battery-electric vehicle market in China held by Audi, BMW, Volkswagen and Mercedes-Benz rose to 4.8% in 2022 from 2.2% in 2020, according to a Reuters analysis of sales data from the Chinese Association of Automobile Manufacturers. The EV [sales of all four German brands added up to only a quarter](https://www.financedigest.com/uk-new-car-sales-up-by-nearly-a-quarter-in-october-smmt.html "UK new car sales up by nearly a quarter in October – SMMT") of BYD’s in 2022. German carmakers’ [total market](https://www.financedigest.com/duct-tapes-market-to-grow-at-5-2-natural-rubber-based-adhesives-to-contribute-over-4-5th-of-total-sales-fmi.html "Duct Tapes Market to Grow at 5.2%; Natural Rubber-Based Adhesives to Contribute Over 4/5th of Total Sales: FMI") share in the country rose from 19.9% in 2015 to 24.6% in 2019, but has fallen back down to 19.1%, according to data provided to Reuters by Germany’s autos association VDA. The [Chinese market is no longer as stable for German carmakers](https://www.financedigest.com/chinese-carmakers-target-more-european-sales-with-five-star-evs.html "Chinese carmakers target more European sales with five-star EVs") as it was,” Thomas Luk, partner at management consultancy Kearney, said on the sidelines of the Shanghai show. “Becoming faster won’t be enough to keep up … their [business culture must change,”](https://www.financedigest.com/business-is-changing-is-your-culture-changing-with-it.html "Business is changing – is your culture changing with it?") he said. ## SHIFT IN THINKING Analysts in Shanghai pointed to the tendency of [German carmakers to market their new EVs as an electric](https://www.financedigest.com/funds-from-electricity-levy-could-help-german-households-says-renewables-association.html "Funds from electricity levy could help German households, says renewables association") version of their combustion-engine predecessors as a sign that the companies had not yet made the mental shift towards putting electrification first. It is important to see EVs as a new generation of products, [rather than an extension of combustion-engine cars,”](https://www.financedigest.com/millennials-would-rather-buy-a-car-than-travel-the-world.html "Millennials would rather buy a car than travel the world") Zhang said. “Hopefully the Shanghai show can shake that misconception.” If foreign brands are stubborn with their thinking, they will be phased out,” Feng Xinya, president of [Chinese state-owned manufacturer](https://www.financedigest.com/leeds-based-flooring-retailer-announces-merger-with-chinese-manufacturer-to-expand-global-footprint-and-accelerate-growth.html "Leeds-Based Flooring Retailer Announces Merger With Chinese Manufacturer To Expand Global Footprint And Accelerate Growth") GAC Group, said. Chinese brands have also adopted new [sales strategies to make inroads in Europe which analysts said European](https://www.financedigest.com/european-new-car-sales-down-in-july-august-acea.html "European new car sales down in July, August – ACEA") legacy brands must learn from to keep up in the digital age. Brands like Nio and Lynk & Co, owned by Geely and [Volvo Cars](https://www.financedigest.com/volvo-cars-q4-profit-lags-forecasts.html "Volvo Cars Q4 profit lags forecasts"), have set up community spaces, cafes and bars, which Nio has said translates into sales via peer-to-peer recommendations. Many are also adopting direct sales, an approach German automakers like BMW and Mercedes-Benz have also said in [recent months they are moving towards](https://www.financedigest.com/ftse-100-inches-towards-recent-highs-as-bp-shines.html "FTSE 100 inches towards recent highs as BP shines"). One of the key objectives of this strategy is to control the [customer experience](https://www.financedigest.com/the-importance-and-growth-of-banking-ecosystems-to-create-superior-customer-experiences-and-value.html "The importance and growth of banking ecosystems to create superior customer experiences and value") fully,” McKinsey wrote in a December report. Still, sources said Chinese brands were focusing first on dominating their domestic [market before taking a more aggressive strategy](https://www.financedigest.com/how-to-create-a-pr-plan-and-link-it-to-your-business-marketing-strategy.html "How to create a PR plan and link it to your business marketing strategy") in Europe, where Asian battery makers have already laid solid ground. Chinese EV brands were for now [setting prices](https://www.financedigest.com/home-prices-are-setting-records-while-mortgage-rates-plunge-is-it-time-to-refinance.html "Home Prices Are Setting Records While Mortgage Rates Plunge – Is It Time To Refinance?") higher to avoid upsetting European policymakers concerned that they will flood the market even though they are able to offer far lower prices, said a source who asked not to be named. BYD this week unveiled the Seagull, an [electric vehicle](https://www.financedigest.com/analysis-when-do-electric-vehicles-become-cleaner-than-gasoline-cars.html "Analysis: When do electric vehicles become cleaner than gasoline cars?") with a range of over 300 km whose price starts at just $11,000 – cheaper than many entry-level combustion-engine models in Europe. The company is planning to [bring the Seal and Dolphin models to Europe later this year](https://www.financedigest.com/austria-plans-to-bring-budget-deficit-within-3-of-gdp-next-year.html "Austria plans to bring budget deficit within 3% of GDP next year"). The [Chinese are more careful in Europe,”](https://www.financedigest.com/power-squeeze-curbs-chinese-growth-leaves-europe-in-a-gas-bind.html "Power squeeze curbs Chinese growth, leaves Europe in a gas bind") Luk said. In China, though, the battle is fierce. “I used to be careful with using the word ‘doomed,'” Zhang of [Automotive Insight](https://www.financedigest.com/automotive-camshaft-market-to-receive-overwhelming-hike-in-revenues-by-2027-tmr-insights.html "Automotive Camshaft Market to Receive Overwhelming Hike in Revenues by 2027 | TMR Insights") said. “But I am quite sure now, at least in China, foreign brands’ days are numbered.” (Reporting by Victoria Waldersee in Berlin, and by Ilona Wissenbach, Zhang Yan, Kevin Krolicki, Brenda Goh and Casey HallWriting by Victoria WalderseeEditing by Ben Klayman and Matthew Lewis) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---