Video: Chinese brands expand their digital footprint in Europe

Sam Robson, Digital Analyst at Sophus3, discusses the mixed fortunes of Chinese car brands entering the European market and how their digital presence has grown rapidly in recent months.

Transcript:

“As the dust settles on this year’s Beijing Motor Show—which put the Geneva Motor Show in February to shame with its packed halls—Sophus 3 will soon be embarking on its third annual analysis of Chinese manufacturers in Europe. The Sophus3 eDataXchange partnership with more than 20 leading car brands has told the incredible story of growth in digital market share for the Chinese car industry, now touching 3% of all brands combined. If you add Volvo, that number more than doubles, something that would have seemed impossible a few years ago.”

“Some Chinese brands, notably HiPhi, have already failed in Europe, but new ones will soon take their place. For example, Chinese smartphone maker Xiaomi, whose first car sold out in under 24 hours in China, just a few weeks after we heard that the all-conquering Western smartphone brand Apple had cancelled its long-running auto program, ‘Project Titan’.

The price advantage enjoyed by Chinese EVs is significant, with a typical model 20% cheaper than its equivalent from European brands. And this is likely to drive even fiercer competition in the future. The average retail price of an EV in Europe was more than €65,000 in the first half of 2023, compared with just over €31,000 euros in China, according to research by Jato Dynamics.

No wonder then that money is being thrown at incentives to encourage more EV sales by traditional brands, as illustrated by this piece of analysis by UK retail specialist ASI, which clearly shows how EVs have received the most support of any fuel type since the end of 2022.”

“Anyone hoping that the European Commission will increase import tariffs when it concludes its investigation in the autumn is likely to be disappointed, such is the price advantage of Chinese brands. Soon, several of them may be manufacturing in Europe too, from BYD in Hungary to Chery in Barcelona, and Leapmotor in Poland.

So what is the current online landscape for Chinese brands? Our research has identified 17 active brands across 13 European markets, led by Sweden, with no fewer than 11. Not all EU5 markets are seeing sustained growth in Chinese brand market share, with the UK seeing a 10% increase in our latest quarterly report, compared with a 2% decline for Germany.”

“But the strongest individual Chinese brands such as MG and BYD continue to impress. In Q1 this year BYD was up 48% in Spain, 60% in the UK, 115% in Italy and 124% in France compared with Q4 last year. Germany was the odd man out with no growth for BYD, although the brand did still record half a million visits in Q1.

All of this digital activity is resulting in more sales, with Chinese brands winning an impressive 8% of battery electric registration share in key European markets in 2023. Although the most successful tended to offer a mix of petrol, hybrid, and EV, such as MG, which is steadily climbing the sales charts in the big five European markets.

Interestingly, our research revealed that ecommerce was the primary retail channel for only three brands: NIO, Polestar and Xpeng, which means that the vast majority of sales have been through traditional retail.

But it’s not all about the price. No fewer than half of the models awarded five stars last year by Euro NCAP—the Europe-wide safety authority—were of Chinese origin, and this despite the increasing importance in the ratings given to Advanced Driver Assistance Systems (ADAS), which actively intervene to avoid or mitigate the effects of a vehicle collision. Such technology leadership as shown by Chinese brands is in stark contrast to the hurried withdrawal from Europe of the Chinese brand Landwind after catastrophically failing the same test program in 2005.

The speed of change makes it essential that all brands track the rapid evolution of these new competitors, and the eDataXchange Insight team will continue to provide regular updates on this important topic. Don’t miss the results of our Chinese brand digital survey later in the year.”