After surpassing Japan in 2023 to become the world's largest automobile exporter, the momentum of "going to sea" of China's automobile industry will continue to grow in the first half of 2024.

According to the data of the General Administration of Customs organized by the China Association of Automobile Manufacturers (hereinafter referred to as the "CAAC"), from January to September this year, China's automobile production and sales were 21.47 million and 21.571 million, respectively, an increase of 1.9% and 2.4%. Among them, the production and sales of new energy vehicles exceeded 8.3 million, an increase of more than 30%, and its sales accounted for nearly 40% of all automobile sales. From January to September, 4.312 million vehicles were exported, up 27.3 percent year on year. Among them, 928,000 new energy vehicles were exported, an increase of 12.5% year-on-year.

 Chery's half-year sales exceeded one million vehicles for the first time, accounting for half of the overseas market. BYD's "going to sea" pace accelerated, the first half of overseas sales have been close to the whole of last year; Geely based on the current situation of overseas markets, increase the export target, the target jumped from "Exporting Countries" to "Export Power", from the Southeast Asian market to Europe, from a single vehicle "sea" to pursue the coordinated output of technology, capital, talent, products, Chinese car companies "sea" is still accelerating.

Overseas business of car companies has hit new highs

From the car companies that have announced the export "report card" from January to September 2024, Chery Group occupies the head position of "going to sea" of car companies. In the first half of the year, Chery Group sold 532,200 vehicles in overseas markets, an increase of 29.4 percent. This data is close to Chery's domestic sales of 568,500 units, and the group's overseas sales are close to the combined overseas sales of Geely, Great Wall and BYD.

 BYD's internationalization strategy continued to advance, with overseas sales reaching 203,400 units in the first half of the year, which was close to the overseas sales of 243,000 units for the whole of last year, promoting the acceleration of new energy models to penetrate overseas markets. In 2024, BYD overseas sales target of 500,000 vehicles, 2025 sales target of 1 million vehicles, plans to double growth in the next three years.

From January to June, the total overseas sales of Great Wall Motor exceeded 200,000, an increase of 62.59%. In June, 38,000 overseas sales were made, setting a new record for overseas sales in a single month.

 The cumulative sales volume of Geely Auto Group from January to June reached 197,000 units, an increase of more than 67% year-on-year. Based on the export market feedback in the first half of the year, Geely also raised its annual export target from 330,000 units at the beginning of the year to 380,000 units.Overall, in the first half of this year, traditional Oems continued their strong growth trend last year, and overseas market sales exceeded expectations.

A new report by AlixPartners, a consultancy, predicts that Chinese branded carmakers will continue their rapid expansion overseas, accounting for 33 per cent of the global car market by 2030, or one in every three cars sold globally.

Accelerating the rush into emerging markets

According to the data of the Passenger Association, Russia, Brazil and Mexico are the three countries with the largest export volume of Chinese passenger cars from January to September this year.

As the largest exporter of Chinese cars, Russia is still dominated by fuel vehicles, continuing the stronger growth trend of the previous year. Public information shows that from January to September this year, in the top ten best-selling passenger cars in Russia, in addition to the local brand Lada, the joint venture brand BELGEE, the rest are Chinese local brands, including Haval, Geely, Changan and Chery five sub-brands.

Latin America and South America, including Mexico, Brazil, Argentina and other countries, as well as the Middle East and Africa, compared with the two major regions of Asia and Europe, the penetration rate of independent brands is still low, and it has become a key area for Chinese car companies to compete for layout.

 In the first half of the year, Geely brand accelerated the deep cultivation of Central and South America, according to Geely Auto Group CEO Gan Jiayue revealed that Geely is planning to expand the sales model, the second half of the company will focus on the Middle East, Eastern Europe and Africa market layout, activate the five Central Asian countries, Mexico and other markets, and accelerate the expansion of Vietnam, Indonesia and other emerging markets.

New forces in car manufacturing are also accelerating their influx into emerging markets. In the first half of the year, Xiaopeng Automobile established cooperative relations with a number of head dealer groups in the Middle East; Nio will enter the UAE this year; Neta signed agreements of intent with dealers in Egypt and Kenya during the Beijing Auto Show and plans to enter the African market.

At the same time, Southeast Asia is still one of the key directions for Chinese cars to go to sea in the first half of this year.

 At this stage, Thailand, Indonesia and Malaysia have formulated relevant policies to encourage and support the electric vehicle industry, and are open to the positive embrace of China's intelligent electric vehicles. Chinese car companies are also more intensive in the local business layout.

 Some insiders said that the Southeast Asian auto market is changing from "the back garden of Japanese cars" to a new battlefield in the battle for Chinese and Japanese cars.

 BYD once again focused on the Southeast Asian market in the first half of this year, its first Southeast Asian factory will be opened in Thailand's Rayong province on July 4, with an investment of $486 million; Gac Aion factory agreement signing ceremony was also held in Bangkok, Thailand in the first half of this year, from the application to the approval of the whole process took 4 months, is currently the fastest landing of the bonded factory in the electric vehicle industry in Thailand.

Neta, the first exporter of new forces, has continued to seek new growth points in the Southeast Asian market this year, putting into production in Thailand in March, opening localized mass production in Indonesia in May, and starting work on the Malaysian factory at the beginning of this year. Deepening ASEAN is still the most critical part of its "going to sea" plan.

It should be noted that in the Southeast Asian market is hot, the simultaneous rush to South America, the development of the Middle East and Africa, Chinese car companies have many "flowering" at the same time, but also have to face the European Union and North America these two difficult "gnawing" market.

 In May, the US government announced a sharp increase in import tariffs on Chinese-made electric vehicles from 27.5% to 102.5%. In June, the European Union issued a statement announcing that it would impose additional provisional tariffs ranging from 17.4% to 38.1% on electric vehicles manufactured in China on July 4.

The imposition of tariffs, increased trade barriers and other problems continue, and the "cake" of stable growth in the European electric vehicle market is stagnating in the middle of the year.

 The time node, export mode and local layout of Chinese car companies to enter the European market will also change at the same time to cope with the upcoming tariff policy. In the short term, slowing down the pace of car companies began to explore long-term based on the European Union, North American market solutions.

Localization production pursues long-term benefits

In the global market, some Chinese car companies are no longer satisfied with a single vehicle "out to sea" approach, but instead pursue the collaborative output of technology, capital, talent and products, integrate into the overseas market system, and achieve localized production in the local area.

The model of "one car to go to sea to drive the whole chain" has accelerated, and the diversified model of going to sea from the vehicle to the auto parts to the sea and overseas joint ventures is continuing to deepen.

Yin Tongyue, secretary of the Party Committee and chairman of Chery Holding Group, pointed out in an interview with the 21st Century Business reporter that in the process of "going out" Chinese automobiles must deeply integrate into the global automobile industry chain, accelerate the development of localization, and cooperate with foreign brands in the whole value chain such as talent chain, innovation chain, industrial chain, and supply chain. Explore the localization business model of "created in China, manufactured overseas and sold overseas".

Taking the Southeast Asian market as an example, relying on its closer geographical location, lower labor costs, and a series of policy dividends such as tax reduction subsidies and tariff exemptions, last year, more and more Chinese auto companies officially declared to Thailand, choosing to buy factories or build factories and other deeper ways to cut into the local market.

 In the first half of this year, the construction of factories in Thailand ushered in the results of the inspection period. According to the incomplete statistics of the 21st Century Business Herald reporter, at present BYD, SAIC MG, the Great Wall, Neta, GAC 'aion, Changan and Chery have achieved a closed loop from creation, production and sales in the Thai market, enjoying the Thai policy dividend while deeply planting the local, the production base also radiation to Southeast Asia and Australia and New Zealand market, accelerating the expansion of the global market.

The overseas territory of Chinese auto companies is still continuing to update, and localized production increases profit points at the same time, but also in the current trade friction is regarded as an effective means to resist risks. The localized production mode of building overseas plants has gradually become the common choice of Chinese auto companies in pursuing long-term interests overseas.

 In June, it was announced that Leapmotor International, a joint venture between Leapmotor and Stellantis, would begin production of  Leapmotor electric vehicles at Stellantis' plant in the southern Polish city of Tychy, with the first T03 small electric vehicles assembled last week. Mass production will begin in September.

The new joint venture model of independent brands with technology output as the core began to work. Through Stellantis' factory in Poland, Zero Run will take advantage of Stellantis' global network manufacturing system and regional advantages to achieve localized production, avoid the policy risks of some markets for Chinese electric vehicles, and quickly occupy the market.

 Wu Qiang, co-president of Zero Run Car, told the 21st Century Business Herald that  Leapmotor cars will choose to export or produce their vehicles locally according to economic costs. "Both models have their advantages and disadvantages, which depends on the economic account. As tariffs rise further, the advantages of local manufacturing will gradually emerge."

In the first half of the year, Chery acquired the original Nissan plant located in Barcelona, Spain, is expected to start production of electric vehicles in the plant by the end of the year, while considering the construction of a second plant to support Chery's medium and long-term plans in Europe, the European plant localization production path is clear.

 Saic announced last July that it would build its first factory in Europe. "With the increasing sales of SAIC MG in the European market, we are planning to introduce Chinese new energy technologies and green factories to Europe," it said in a recent statement in response to the EU tariffs.

 In addition, BYD announced the construction of a new energy vehicle production base in Szeged, Hungary, at the end of last year, which will be completed and put into operation within three years.

 Although the final tariff policy takes effect still needs to wait for negotiations between the two sides, in order to avoid the policy risks of some markets for Chinese electric vehicles, cope with the impact of high tariffs, and quickly occupy the market, many car companies have begun to accelerate the construction of local factories. Localized production in overseas markets has become the general trend for Chinese car companies to "go to sea".