[SmartCat]

Originally Posted by OffRoadFun

Unless major innovation comes from US/EU soon, coupled with economies of scale, it seems Chinese are unstoppable!

Tariffs & anti-dumping duty will work too.

EU to investigate 'flood' of Chinese electric cars, weigh tariffs
https://www.reuters.com/world/europe...es-2023-09-13/

The European Commission launched an investigation on Wednesday into whether to impose punitive tariffs to protect European Union producers against cheaper Chinese electric vehicle (EV) imports it says are benefiting from state subsidies.

"Global markets are now flooded with cheaper electric cars. And their price is kept artificially low by huge state subsidies," European Commission President Ursula von der Leyen said in her annual address to the bloc's parliament, seen by many in Brussels as a pitch for her re-appointment for a second term.

Automotive industry is way too important for EU to let ideals like "free market" sort things out. Some numbers:

- Constitutes 7% of EU's GDP
- Employs 13 million people directly and indirectly
- $1 trillion in revenues (incl components)

[OffRoadFun]

Originally Posted by SmartCat

Tariffs & anti-dumping duty will work too.

EU to investigate 'flood' of Chinese electric cars, weigh tariffs
https://www.reuters.com/world/europe...es-2023-09-13/

Automotive industry is way too important for EU to let ideals like "free market" to sort things out.

I suspect EU's (= German/Swedish mostly) options may be limited this time if they decide to investigate the Chinese "subsidies". For BMW/Mercedes/Audi/VW, the major market is China, bigger than the US, bigger than EU itself. Volvo is actually Chinese owned already. Mercedes has some 20% stake owned by Chinese anyways. China has enough weapons to launch counter investigations should EU do that. In any case, EU will lose.

Some 40-50pct of overall sales of these EU companies come from China. The best bet for EU companies is to acquire stake in Chinese auto companies, which they already seem to be doing as per the article I pointed to. If you can't beat them, join them! Did anyone notice how Chinese have gained share even in India in last few years and Europeans are retreating ?

[SmartCat]

Originally Posted by OffRoadFun

Some 40-50pct of overall sales of these EU companies come from China.

Nah, EU automotive exports to China is significant, but not life or death situation. That's because all EU brands have been arm twisted into setting up assembly/production lines in China (just like in India). And it makes no sense for China to retaliate against European automobile brands when they employ millions in China.

For BMW/Mercedes/Audi/VW, the major market is China, bigger than the US, bigger than EU itself.

It is just like how India is a major market for Suzuki. It does not mean we import lot of automobiles from Suzuki or Japan.

I suspect EU's options may be limited this time if they decide to investigate the Chinese "subsidies". China has enough weapons to launch counter investigations should EU do that. In any case, EU will lose.

EU exports to China: $260 billion
EU imports from China: $600 billion

So it is advantage EU if China tries its hand at a trade war. And China will try to avoid opening a second front because they still have lots of trade friction with US. Sure they will retaliate in some form via tariffs/export bans, but is likely to be insignificant.

The best bet for EU companies is to acquire stake in Chinese auto companies, which they already seem to be doing as per the article I pointed to. If you can't beat them, join them!

Buying shares in Chinese cos will not help employ people in EU. Eventually, Chinese companies will be nudged into setting up car factories in EU, to get around anti-dumping duties. That will level the playing field a bit, but Chinese EV brands will probably continue to gain global marketshare

[OffRoadFun]

Originally Posted by SmartCat

Nah, EU automotive exports to China is significant, but not life or death situation. That's because all EU brands have been arm twisted into setting up assembly/production lines in China (just like in India). And it makes no sense for China to retaliate against European automobile brands when they employ millions in China.

Buying shares in Chinese cos will not help employ people in EU. Eventually, Chinese companies will be nudged into setting up car factories in EU, to get around anti-dumping duties. That will level the playing field a bit, but Chinese EV brands will probably continue to gain global marketshare

No, I never mentioned export figures, but overall sales figures of these cars in China over which China can easily exert control:
Here are the overall sales statistics:

Mercedes: 37% of all Mercedes sold are in China
Audi (VW part): 40%
BMW: 33.1%
VW group: 50% of all of VW sales are in China


China can easily arm-twist these companies in view of these using bogus investigations, just like they did with Qualcomm. We are not talking about general exports here. I don't think it will escalate into a full fledged trade war to involve all commodities so the overall export figures may not be relevant (that's a topic for another discussion, for example India does not love China but still has to contend with large trade deficit and so do others like US/EU. Everyone wants things cheap, even from autocratic nations).

Again, imposing tarrifs to nudge into local manufacturing is not that easy, they have agreements with the US also on tarrifs and even if they do, it is still a big victory for the Chinese, they will have market and can re-patriate the money made there to whereever they like, just like Maruti Suzuki also pays a hefty royalty to its parent in Japan every year. In any case, my original point, which is decline of market share of EU companies in EU, taken over by Chinese holds true, including the scenario you mentioned.

[SmartCat]

Originally Posted by OffRoadFun

In any case, my original point, which is decline of market share of EU companies in EU, taken over by Chinese holds true, including the scenario you mentioned.

Broadly agree - but if tariffs/duties are applied or if Chinese EV makers are nudged to setup factories in EU, what it will do is shrink the price difference between European and Chinese EVs



As the price difference shrinks, the attractiveness of Chinese EVs will drop significantly - simply because they lack brand value. So it is likely to slow down their market share gains. This will give breathing space & time for EU brands to innovate and fight back.

Look at our own Indian market which has level playing field thanks to (tariffs + local manufacturing). Chinese automotive brands/cars have been around for sometime now - Premier/GM SAIC/MG Motors/BYD - they have just 1% marketshare in cars.



The marketshare of Chinese bike makers in India is so sad, that it does it not even make it to our monthly sales thread. But why is this so? It is simply because there is not much price difference between:

MG Hector vs Hyundai Creta
MG ZS EV vs Hyundai Kona
QJ SRK 400 vs KTM Duke 390

When the playing field is leveled, you have to compete on brand value & product quality - and not on price.