Skd884
MB Enthusiast
- Joined
- Sep 13, 2017
- Messages
- 3,913
- Car
- i3
Follow along with the video below to see how to install our site as a web app on your home screen.
Note: This feature may not be available in some browsers.
Possibly because the sales volumes of Chinese manufacturers haven’t yet made a meaningful impact on premium marques in any market, whereas premium marque sales had been a meaningful and growing market in China.Good article.
Again the manufacturers’ emphasis is on EBIT and volume damage caused by the Chinese economy more than damage done by Chinese car manufacturers or EV’s, although others will grasp at those straws
Yes, being ten years ahead of the West in battery technology, while also producing at a fraction of the cost has been quite an advantage. Although being faster to market helps.Possibly because the sales volumes of Chinese manufacturers haven’t yet made a meaningful impact on premium marques in any market, whereas premium marque sales had been a meaningful and growing market in China.
Losing a big chunk of that demand and growth potential in China will make a much bigger impact on the premium brands now and in the next few years. However in 10 years time the Chinese brands could be quite well established in Western markets.
I believe it will be much easier and therefore quicker for Chinese brands to take sales from premium manufacturers than it has been for the Koreans and Japanese before that because technology, perceived “flash” and monthly cost are so influential now on new car sales.
They are all much easier, much quicker and much cheaper to achieve than establishing brands, racing pedigree, engineering excellence, customer service, and so the Chinese brands will not need a big run up to become competitive, especially with junior exec models A/C/1/3A3/A4.
There’s tended to be a half life in the time required to establish brands. The Korean manufacturers achieved what the Japanese manufacturers did in half the time. The Chinese manufacturers will achieve the same in much less than half the time of the Koreans.
Logically the sales volumes of Korean manufacturers will be most vulnerable to the Chinese manufacturers, however It will be interesting to see whether the established might and relatively early investment in EV and ICE capability will enable them to put up a strong fight.
I believe that the European brands associated with small cars are likely to struggle to put up a fight most, the likes of Renault, Peugeot, and Fiat. They rely on selling relatively large volumes of relatively small cars with relatively little margin in each, whilst carrying the cost of their legacy.
That makes them most vulnerable, and their customers will typically switch brands if the monthly cost of a similar model from a different manufacturer is £20 less per month. At the moment the Chinese brands can afford to undercut by several multiples that amount and still make a profit.
Giving up a little of the profit potential with killer monthly deals is an exceptionally inexpensive way of establishing a competitive car brand. Let’s see whether the the EU take a more defensive approach to protect their domestic manufufacturers.
My view is that there are parallels with what happened in the USA in the 1980's and 1990's when the Japanese brands really gained market share at the expense of the domestic car makers. The USA back then was far ahead of the UK in the lease / monthly payments criteria for car "purchase" and, as mentioned, that makes it much easier for a new entrant to gain market share.I believe it will be much easier and therefore quicker for Chinese brands to take sales from premium manufacturers than it has been for the Koreans and Japanese before that because technology, perceived “flash” and monthly cost are so influential now on new car sales.
My view is that there are parallels with what happened in the USA in the 1980's and 1990's when the Japanese brands really gained market share at the expense of the domestic car makers. The USA back then was far ahead of the UK in the lease / monthly payments criteria for car "purchase" and, as mentioned, that makes it much easier for a new entrant to gain market share.
On the subject of cost base, another cost factor that the new entrants don't have to concern themselves with is a long tail of ex-workers who they provide pension - and perhaps healthcare - benefits to, which all of the established manufacturers have to a greater or lesser extent. A friend of mine was doing consultancy work in the USA at the time when all the big domestic automakers there were teetering on the edge financially and did a job for GM. As one of the Executive VP's in Detroit said to him, "You're making the mistake of thinking that this business is primarily an automaker. We're not. We're a pensions and healthcare provider that happens to make vehicles".
That’s exactly the sort of thing I meant by “carrying the cost of their legacy”.My view is that there are parallels with what happened in the USA in the 1980's and 1990's when the Japanese brands really gained market share at the expense of the domestic car makers. The USA back then was far ahead of the UK in the lease / monthly payments criteria for car "purchase" and, as mentioned, that makes it much easier for a new entrant to gain market share.
On the subject of cost base, another cost factor that the new entrants don't have to concern themselves with is a long tail of ex-workers who they provide pension - and perhaps healthcare - benefits to, which all of the established manufacturers have to a greater or lesser extent. A friend of mine was doing consultancy work in the USA at the time when all the big domestic automakers there were teetering on the edge financially and did a job for GM. As one of the Executive VP's in Detroit said to him, "You're making the mistake of thinking that this business is primarily an automaker. We're not. We're a pensions and healthcare provider that happens to make vehicles".
We use essential cookies to make this site work, and optional cookies to enhance your experience.