Chinese Car Brands Take the World by Storm: Low Prices, High Specs Challenge Established Giants

Chinese Car Brands Take the World by Storm: Low Prices, High Specs Challenge Established GiantsMarch 18Despite former US President Trump's attempts to block their entry into the American market, Chinese automakers have successfully expanded globally, achieving remarkable growth in numerous countries. From Bangkok, Thailand, to Johannesburg, South Africa, and So Paulo, Brazil, affordable compact cars, crossovers, and SUVs produced by Chinese manufacturers like Great Wall Motors, BYD, Chery Automobile, and SAIC Motor are increasingly dominating streets

Chinese Car Brands Take the World by Storm: Low Prices, High Specs Challenge Established Giants

March 18Despite former US President Trump's attempts to block their entry into the American market, Chinese automakers have successfully expanded globally, achieving remarkable growth in numerous countries. From Bangkok, Thailand, to Johannesburg, South Africa, and So Paulo, Brazil, affordable compact cars, crossovers, and SUVs produced by Chinese manufacturers like Great Wall Motors, BYD, Chery Automobile, and SAIC Motor are increasingly dominating streets. While the US, Canada, and the EU have imposed tariffs on Chinese-made electric vehicles (EVs), the enthusiasm for Chinese brands in emerging markets remains unabated, posing a significant challenge to global automakers.

Oscar Mabuela, a 29-year-old web designer from South Africa, represents the coveted customer profile that global auto giants are chasing. When choosing a new car, he considered the Volkswagen Polo, a top seller in South Africa, but concerned about theft, opted for a Great Wall Haval Jolion SUV. A used fuel-powered version cost 350,000 South African Rand (approximately $19,300), while a new 1.5-liter version starts at $25,000undercutting the $27,500 price tag of a 1.0-liter Volkswagen Polo. "I get the high-tech features I'd have to pay extra for on established brands," Mabuela explained.

Mabuela's choice is not an isolated incident. Consumers like him are driving the rapid market share gains of Chinese automakers. In South Africa, Chinese-made vehicles have captured nearly 10% of the marketfive times their share in 2019. In Turkey, their market share surged from virtually zero in 2022 to 8% in the first six months of 2024. In Chile, Chinese cars have held nearly a third of the market for several years. According to the China Association of Automobile Manufacturers (CAAM), China has become the world's largest car exporter, with passenger car exports nearly doubling year-on-year to 4.9 million units in 2024 alone (compared to less than 1 million in 2020).

"Chinese automakers are rapidly penetrating several global markets with high quality and competitive pricing," says Abby Chun Tu, an automotive research analyst at S&P Global Mobility in Shanghai. "This strategy mirrors the success of Korean and Japanese brands, but Chinese brands also offer advanced software technology and feature-rich specificationseven in mainstream models."

While US and European leaders have long harbored concerns about China potentially dominating the EV market, CAAM data reveals that nearly 80% of Chinese car exports last year were still fuel-powered vehicles. Many developing countries lack sufficient charging infrastructure or reliable electricity grids to support widespread EV adoption. However, these are precisely the markets where Chinese automakers struggle to sell fuel-powered cars domestically, presenting a perfect opportunity.

AlixPartners predicts that the market share of Chinese automakers in overseas markets will climb from the current 3% to 13% by 2030. Including their home market, their global market share will jump to 33%, reaching an estimated 39% in Africa and the Middle East.

At a February conference hosted by investment firm Wolfe Research, executives from Ford and General Motors acknowledged the growing competitive pressure from Chinese automakers in emerging markets. "Our overseas business is very strong, but the Chinese are coming into those markets and globalizing the supply chain," said Ford CEO Jim Farley, citing emerging markets like India and South America where Chinese influence is rising. Ford has ceased vehicle production in Brazil, its former factory acquired by BYD. However, Ford continues operations in South Africa and Thailand. "We have to think about future defenses," Farley noted.

GM also views Chinese automakers as serious competitors, but CEO Mary Barra has opted for a more flexible collaborative strategy. GM exports some models produced by its Chinese joint ventures to emerging markets like Brazil. Barra stated that collaborating with Chinese automakers on certain products helps GM compete better in markets where "Chinese automakers are very active."

Stellantis NV, owner of the Chrysler and Ram brands, is also partnering with Chinese counterparts in Europe and plans to introduce its models to the Middle East and South America. According to Jato Dynamics, Jeep's market share in Latin America still significantly surpasses its closest Chinese competitors, accounting for one-fifth of the region's car sales. In contrast, Chery holds the largest market share among Chinese manufacturers, at approximately 2.1%. Meanwhile, Jeep attributed a 30% drop in Asia-Pacific shipments last fall to competitive pressure from Chinese brands.

The success of Chinese automakers is also fueled by shrewd marketing. In Brazil, Chinese cars have become as common a sight as Chevrolets and Toyotas. Great Wall created a dedicated page on Brazils popular online marketplace Mercado Livre and enlisted top Brazilian musician and DJ Alok as a brand ambassador. BYD used the image of Brazilian football legend Pel in its advertisements. These campaigns have built brand awareness, but low prices remain the primary draw.

Luiz Palladino, a 61-year-old engineer who previously owned vehicles from General Motors and Honda, now drives a Haval H6 electric vehicle. He compared it favorably to more expensive luxury cars, claiming that its quality was on par with high-end brands like BMW and Audi. "When I got in, I felt it had the same build quality as a BMW or Audi luxury vehicle, top automotive craftsmanship, perfectly meeting my needs," he explained.

Chinese brands first gained a foothold in Brazil in 2015, when the government waived the 35% import tax on EVs and hybrids. To avoid potential tariff reinstatement, BYD and Great Wall are now building factories in Brazil, specifically in former Ford and Daimler facilities. "Chinese automakers found a great opportunity to make Brazil a hub for westernizing their vehicles," says Ricardo Roa, partner and head of automotive at KPMG Brazil. "From Brazil, it's easier to reach other South American markets: Argentina, Chile, Colombia, even Peru."

Asia's largest automakers are also grappling with the challenge posed by the rising Chinese automakers. Toyota Motor Corporation holds a 17.4% market share in the Middle East and Africa, according to Jato Dynamics, but is being pursued by Chery and Geely, with 5.3% and 2% market shares respectively. Toyota faces similar pressure in Southeast Asia, despite controlling 35.7% of the market, with Geely and SAIC capturing 5.1% and 1.4% respectively.

Similar to Brazil, Chinese automakers leveraged policies aimed at boosting EV sales to expand their share of the Thai car market. In Thailand, long known as the "Detroit of Southeast Asia," Chinese brands' market share rose to 13.3% in the last quarter of 2024, up from 5.5% two years earlier, according to S&P Global Mobility. More notably, their share of Thailand's EV market surged from 22% in 2022 to 71% in the same period. The Thai government lowered import duties on EVs, increased purchase subsidies, and offered significant tax breaks for factory investment. As a result, EV sales soared by over 600% in 2023 to 73,568 units, accounting for nearly 9.5% of total passenger car sales, according to the Federation of Thai Industries. While sales dipped slightly in 2024 to 66,732 units, their share of overall car purchases rose to nearly 12%.

Toyota and other Japanese automakers spent decades building fuel-powered car production infrastructure but have been slower to adapt to the shift to electrification. Subaru halted car production in Thailand last year, and Suzuki Motor Corporation plans to close its Thai plant by the end of 2025. Nissan Motor Co. will also close one of its two car assembly lines in Thailand this year. This leaves more opportunities for lesser-known Chinese competitors.

At the opening day of the Bangkok International Motor Show in November 2024, Toyota, Ford, and Honda shared the stage with BYD, Great Wall, SAIC MG, and Geely, marking Geely's first entry into the Thai market. Wiyawit Petra, a 57-year-old businessman, was drawn to BYD because of its global reputation, local production, and low prices, prompting him to consider a different brand. I've driven Toyotas and Hondas my whole life, but I'm open to trying something new, Petra said at the show, planning to purchase a BYD Sealion 6 plug-in hybrid SUV. It's also reasonably priced, so it's worth a try.