In 2009, the Chinese market’s auto production and sale scales surpassed America, becoming the largest global auto market in a single bound. In 2015, new auto sales in China occupied 27.9% of global auto sales, reaching a proportion of over one fourth.
As the world’s largest auto market, China has the most auto brands, the largest new car circulation scale, the largest auto production and sale scales, and the most abundant auto industry profits. However, looking back, just what effect does China have on the development of the global auto industry?
The answer appears to be negative. From construction of factories, assembly lines, the accessory supply system, distribution sales, and after-sales service channels to new car R&D, etc., we’ve always held a student’s attitude toward learning advanced overseas technologies and management experiences.
In recent years, there have indeed been many joint venture companies that have built world-class R&D centers in China, but the effect of these centers is mostly toward undertaking the R&D of overseas models and local special supply models. In terms of management models, this hasn’t shaped into experiences and features that other countries and regions can learn from. Simply speaking, in the interaction with the global auto industry, China really hasn’t acted as a leading or driving role.
However, with the increasing influence of the Chinese market and the improvement of technology and society, this interactive relationship will change. While China is influenced by the global auto industry, we will also guide an important development opportunity for the global auto industry. As the saying goes, a small sign can indicate a great trend. By paying attention to Chinese auto trends, we believe we can get a peek into global change.
First, let’s look at factors that will influence future China auto.
1. Pressures brought on by the environment and resources.
As of now, China is the world’s largest oil importer and greenhouse gas emitter. According to McKinsey’s report, China car inventory will reach 430 million units. The oil demand created by these cars could possibly occupy 25% of the current global oil output.
If we calculate based on the current conventional auto development trajectory, by 2025, neither the China auto market nor the global auto market will be able to sustain this demand. Smog and congestion problems in Chinese cities are also a factor in sustainability issues. Some first and second tier cities with serious situations must adopt administrative methods such as forcible control of auto unit growth and use.
2. Renewal and perfection of the industry chain.
Over many years of development, the fields of mid and low-end Chinese gas-powered auto have already formed a near-perfect industrial chain, enough to support competition between local brands. In the past two years, performance of local brands such as Geely, Great Wall Motors, and Chang’an Motors has been proof enough.
From a government standpoint, creating a competitive NEV, intelligent car, and connected auto industry has become part of the Made in China 2025 strategy. The gradual perfection of the industry chain and reduced barriers to entry for auto production will benefit all players in the Chinese market.
3. Improvement of Internet technology.
The rise of mobile internet expanded online activities from fixed to mobile terminal installments, allowing the economy of sharing to have greater developmental space. Incidents of auto sharing, such as Didi Transport and Yidao Auto, have risen accordingly.
Of course, with regards to the auto industry, the most influential is none other than the improvement of mobile connected technologies such as connected car and intelligent car. They will revolutionize our understanding of cars.
4. Changes in consumer preference.
According to research in Deloitte’s “The Changing Nature of Mobility”, consumers in emerging markets such as China and India have a higher interest in car automation, are more willing to try mobile app software, and have higher expectations toward alternative power systems.
TNS Sinotrust’s research has also shown that, as compared to their predecessors, the new generation of post 90s consumers prioritizes auto convenience over auto ownership.
In the future, in exactly what direction will China auto mobility go?
We believe that future mobility will change the mobility machines with features such as conventional resources, human driving, single car, and ownership, changing into intelligent mobile services with NEV, intelligent car, connectivity, and sharing as the main features. This change will gradually occur, and in the course of development, we must continuously remove obstacles related to technology, ethics, and law. In the future, certain fields could also produce new demands and trends.
Based on the same line of thought, some conventional cars have one after another transformed, exploring in the direction of future mobility. As of now, GM has announced a whole new strategy: aside from all new deployment in fields of self-driving, car sharing, fuel cell promotion, new material and technology use, and core business strengthening, GM will put effort towards actualizing future mobility for its consumers.
At the same time, new players in these fields have conducted revolutionary innovation. For example, companies such as Tesla, NextEV, and Harmony Auto have actualized innovations surrounding NEV. Likewise, Google and Baidu have done so for self-driving, Ali YunOS and Apple Carplay for connected car, and Uber and Didi for car sharing.
Picture below (left to right): NEV innovation, self-driving innovation, systems innovation, car sharing innovation
An all new generation has stolen upon us, whether we’ve perceived it or not.