China becomes the champion of car export for the first time

According to a report by the German "Der Spiegel" magazine, China's car export volume surpassed that of Japan and Germany, becoming the world champion of car export for the first time. Experts say China is becoming an auto superpower.

An employee works on the assembly line at the SAIC Volkswagen MEB electric car plant.

An employee works on the assembly line at the SAIC Volkswagen MEB electric car plant. © Reuters Pictures

author:

Berlin Special Correspondent Dan Lan

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For the first time this year, China became the world champion in car exports, according to estimates by business consultancy AlixPartners. In the first quarter alone, China has exported 1.07 million vehicles, surpassing Japan's export volume of 954,000 vehicles, and surpassing the third-placed export volume of Germany's 840,000 vehicles. South Korea ranked fourth with 750,000 vehicles, followed by Mexico with 741,000 vehicles. AlixPartners experts believe that China, as a production place, sales market and exporter, is "becoming a superpower in automobiles."

This year, China's auto sales will reach 20.5 million. Of these, 10.5 million are expected to be produced by domestic manufacturers. In other words, Chinese producers accounted for more than half of sales. Chinese companies are also making inroads into the world market with electric vehicles and are increasingly putting pressure on European automakers in their home market.

The global auto market is growing again, but at a much slower pace than expected. The impetus came from the United States. “In the longer term, sales figures in Europe will be more than 15% below pre-COVID levels,” Alix research said.

Industry experts believe that "the era of record profits for German automakers is coming to an end". Margins are under increasing pressure amid cooling world markets and growing competition. Battery costs are falling too slowly, inhibiting the rapid growth of electric vehicle sales in the next three to five years, and hindering the cost advantage of high volume.

Raw material costs have also risen again due to increased demand from China, "but will not return to pre-coronavirus levels". The cost of funds will also rise due to the shift in interest rates. Alix restructuring expert Jens Haas expects "further consolidation in the supplier industry." Debt is currently at record levels, while at the same time the cost of capital and the need for capital and investment funds for current operations are rising. Automakers are less likely to raise prices.