Chinese automakers to grab majority share of domestic sales for first time, forecast says

AlixPartners forecast China’s overall auto sales would grow 3 percent this year to 24.9 million vehicles, recovering to the level of sales before COVID-19. It forecast growth to 30.6 million vehicles in 2030, when it projected more than half of vehicles sold in China would be EVs.

China’s market for what it calls “new energy vehicles” (NEVs), including plug-in hybrids and pure electrics, has benefited from the equivalent of $57 billion in subsidies from the government during 2016 to 2022, the consultancy said.

By contrast, the U.S. government has provided $12 billion in subsidies over that time, AlixPartners said.

But Chinese EV makers have also gained ground from a focus on features such as advanced driver assistance systems even on cheaper cars, the firm said.

That competitiveness will make Chinese automakers as disruptive to established global automakers in coming years as Tesla has been, said Stephen Dyer, who heads AlixPartners automotive consulting in Asia.

“It would be the best for foreign brands to learn from new Chinese EV startups if they want to survive in China or face the disruptive impact from those brands in their home markets,” Dyer said at a briefing.

Dyer forecast annual sales of Chinese-branded cars in overseas markets would grow to 9 million vehicles by 2030. That would give Chinese brands 30 percent of global share and a market share of 15 percent in Europe, 19 percent in South America and 19 percent in South East Asia and South Asia.

China’s market also faces massive overcapacity, and Dyer forecast a wave of consolidation. Only 25 to 30 out of the 167 NEV brands can survive by 2030, Dyer said. Over two-thirds of those brands haven’t recorded any sales last year, he said.

“Even with best-in-class operations, it takes up to 400,000 units of annual production to reach breakeven,” he said.