International automotive OE from Germany, the US, and Japan are facing automotive chip shortages and production cuts. This has put a strain on joint venture brands in the Chinese market and provided an opportunity for Chinese EV (electric vehicle) brands.
Automakers Toyota, Volkswagen, and Ford have all been impacted by the pandemic in Malaysia and supply shortages from Japanese semiconductor manufacturers. Chip shortage couldn't get eased as expected, leaving them with no choice but to warn of third-quarter production cuts.
International automotive OE with deep ties to Chinese joint venture brands will continue to feel the impact of chip shortages in 2021. Joint venture brands have little power to compete with international OE for chips, according to industry sources. Furthermore, car designs and operations usually follow international OE specifications, and making changes to original designs and altering chip usage is difficult in the short term.
Based on data released by the China Passenger Car Association, July car sales in China reached 1.5 million vehicles, down 7% on year. Total sales for joint venture brands were 670,000 units for a market share of roughly 45%, down 19% on year and 7% on month. This is in contrast with China's own brand sales and manufacturing of new energy vehicles (NEV) which posted strong growth.
FAW-Volkswagen, SAIC-Volkswagen, FAW-Mazda, and Dongfeng-Honda have seen annual declines of more than 40%; GAC Mitsubishi and SAIC-GM more than 20%; Changan Mazda, Guangqi Honda, and SAIC-GM-Wuling more than 15%.
Output from joint venture brands has not met expectations, which has allowed Chinese brands to take the opportunity since their designs are more flexible. They have local support from the Chinese semiconductor supply chain and are more flexible as independent brands. Furthermore, the price competitiveness of Chinese car brands is very high.
In July, several Chinese automakers saw increases in their annual output: BYD Auto increased by 80%, Chery Automobile by over 50%, Great Wall Motors by 17%, and Chang'an Automobile by 8%. Only Geely, which most resembles the international OE style, fell 5% on year. NEVs took up 16% of the passenger car market. BYD, Li Auto, and XPeng have more than doubled their output. NIO has more than doubled on year, Nezha has increased by nearly 40%, and Leapmotor has exceeded 60%. Although Tesla's annual growth has nearly doubled, it is down nearly 70% from June.
Article translated by Eifeh Strom
