Chinese automotive price war could affect European markets: Indicata
As Chinese automakers cut prices by up to 34% and EV discounts average 17%, ripple effects could affect car values across Europe and the UK.
The Chinese market is experiencing intense competition with more than 100 EV brands and is projected to exceed 33 million vehicles by 2025.
Indicata global business unit director Andy Shields said: 'Chinese OEMs are facing massive oversupply and intense competition in their domestic market.'
BYD recently announced price cuts across 25 models due to excess inventory, compressing vehicle margins industry-wide.
Indicata's analysis also highlights significant barriers for Chinese manufacturers in other markets.
The US market remains largely inaccessible due to high tariffs.
Other global markets outside Europe could absorb internal combustion engine (ICE) and plug-in hybrid electric vehicles (PHEV) but lack the infrastructure for battery-electric vehicle (BEV) adoption, the technology vendor explained.
Chinese manufacturers are shifting focus from BEVs to ICE and hybrid vehicles.
This strategic shift addresses tariff considerations and slower-than-expected BEV demand.
Indicata projects increasing pressure on the EU, UK, Brazil, Mexico, and Australia to absorb Chinese vehicles, including PHEVs.
'Whilst there are tariffs in place for BEVs in the EU, it's still possible for Chinese manufacturers to sell BEVs in Europe more profitably than in their home market,' Shields added.
'The UK market is particularly exposed, as there are currently no additional tariffs on Chinese BEVs.
Indicata said that the competitive landscape is unsustainable, with most manufacturers needing one million vehicle production annually for profitability.
Only a few brands, including BYD, Li Auto, and Seres, report consistent margins while others such as Nio face cash burn impacting profits.
Industry consolidation appears unavoidable as smaller firms confront acquisition or risk exiting the market, Indicata said.
Recognising the sector's instability, the Chinese Government is signalling broader shifts ahead for the global automotive landscape.
Chinese EV manufacturers aim for 50% of sales from international markets, with exports already at 33% of China's total EV production in early 2025.
However, this strategy risks geopolitical tensions, evolving tariffs, and regulatory barriers.
European consumers may benefit from lower-priced, advanced vehicles in the short term, but long-term implications for used car markets could be significant, as competitively priced Chinese vehicles might pressure used vehicle valuations.
Automakers such as Volkswagen and Honda struggle to compete with Chinese EVs, while the price war in China further challenges Western manufacturers.
These OEMs may focus more on their home markets in Europe, leading to increased competition and price wars to avoid CO₂ penalties, impacting sales of both new and used vehicles during 2025.
"Chinese automotive price war could affect European markets: Indicata" was originally created and published by Motor Finance Online, a GlobalData owned brand.
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