Despite high tariffs from the European Union (EU), Chinese automobile companies are reportedly accelerating their efforts to penetrate the European market. Their strategy of diversifying the types of vehicles sold and the regions targeted, based on rapid development capabilities, seems to have led to an increase in market share.
On the 18th (local time), The New York Times (NYT) reported that Chinese automobile companies are showing a sharp sales growth in Europe. According to the market research firm JATO Dynamics, in April, Chinese brand vehicles accounted for 4.9% or 53,000 units of the total new vehicle registrations in the EU, doubling from the previous year (2.4%).
The sales recovery of electric vehicles (EVs) is also evident. In October, after the EU decided to impose anti-dumping tariffs for the next five years, the sales of Chinese EVs temporarily declined. However, in April, the sales of Chinese EVs surged 59% compared to the previous year, significantly outpacing the overall EV market growth rate in Europe (26%) during the same period. Currently, one out of five EVs sold in Europe is reported to be Chinese.
The strategic flexibility of Chinese automobile companies is cited as a key factor in their rapid expansion in the European market. As the EU's high tariffs focused on EVs, they increased the import ratio of internal combustion vehicles and hybrids, centering sales around more affordable models.
Currently, the tariff rate applied to Chinese EVs in the EU varies by manufacturer. In addition to the overall import car tariff (10%), Shanghai Automotive Industry Corporation faces a 35% tariff, BYD faces a 17% tariff, and Tesla (produced in Shanghai) is subject to an 8% tariff.
In fact, as of the first quarter, the proportion of EVs in vehicles sold by Chinese corporations in Europe was only one-third.
The strategy of diversifying sales regions is also believed to have been effective. For a long time, the European automobile market has favored domestic brands centered around Germany and France, making it difficult for non-European companies to enter. Volkswagen, producing Audi and Skoda, has reached a market share of 28% in the European new car market, while Stellantis, which owns Peugeot and Citroën, is close to 16%.
In this context, Chinese corporations seem to have targeted the southern European market, where brand loyalty is relatively low. Two-thirds of Chinese car sales in the first quarter were made in Italy, Spain, and the United Kingdom. In Italy, loyalty to domestic manufacturer Fiat has significantly decreased, while there is a lack of competitive car manufacturers in Spain. Furthermore, the UK is advantageous as it is not an EU member country, meaning tariffs do not apply. A notable characteristic of these regions is the lack of EV charging infrastructure.
Recently, the political actions of Elon Musk, CEO of Tesla, have also become a boon for Chinese companies. Musk's public support for far-right political forces has intensified resentment towards Tesla among European consumers. In April, BYD's EV sales in Europe amounted to 7,231 units, surpassing Tesla (7,165 units) for the first time.
Of course, the manufacturers' superior production capabilities also underpin their fundamental competitiveness. Pierre Giacomo Capella, head of an Italian import car dealership, stated, "German manufacturers take at least two years to develop new models, while Chinese companies like BYD, Geely, and Chery can do it in just six months."
Chinese companies are already showing faster growth in Europe compared to competitors like Toyota and Hyundai. According to the European Automobile Manufacturers Association (EAA), as of April, the market share of Toyota and Hyundai in new car registrations in the EU is about 8%, while Ford is at 3%. General Motors (GM) has also shown minimal presence, focusing solely on electric Cadillac sales.
In the future, the push of Chinese car companies into the European market is expected to accelerate further. In particular, BYD plans to begin operations in Hungary and Turkey next year, indicating signs of market share expansion. Felipe Muñoz, a researcher at the European automotive research firm Schmidt Automotive Research, noted, "Once BYD ramps up local production in Hungary and Turkey, the growth rate in Europe will accelerate significantly from now."