US expert: China's auto industry is developing synchronously in all fields

At a recent symposium organized by the University of Michigan, American experts discussed the current situation of China's auto industry. They believed that despite the current pressure from the economic and environmental fields, China's auto industry has entered a relatively stable period after years of rapid development.

Growth rate slows down and scale expands

Michael Jackson of IHS Automotive Research said at the conference that China's current growth rate has slowed down, and the country's leaders hope to achieve an economic return of 6.5% in the next "Five-Year Plan". However, Jackson believes that the Chinese government leaders are too optimistic based on the current situation. "We think the growth rate will be lower, but the scale will be larger."

Jackson pointed out that due to the impact of relevant industry policies, car sales in first-tier cities such as Shanghai and Beijing will shrink, but car sales in smaller cities will continue to grow.

In 2015, China's auto sales reached 24.5 million units, and will continue to grow in the next few years. According to US experts, after 2020, China's annual auto sales will exceed 30 million units, and China's position as the main engine of the global auto industry will be deepened.

According to John Jullens, global partner of Strategy, a consulting firm under PwC, the compound annual growth rate of China's auto sales will drop significantly, while the compound annual growth rate of China's auto sales was as high as 21% between 2003 and 2013. However, thanks to the changes in lifestyles in small cities and the improvement of China's infrastructure, it is expected that the average annual growth rate of China's auto sales will be around 5% between 2015 and 2023, and annual sales will increase to 30 million vehicles by 2020.

Jullens pointed out that this growth will bring new opportunities for luxury cars. For the younger generation of Chinese consumers, they are more willing to be the driver of a high-end car rather than a driving "instructor" in the back seat.

Joint ventures flourish, but local enterprises face many challenges

Participants in the symposium also pointed out other trends in China's auto industry, one of which is the steady growth of joint ventures in China by large automakers such as Volkswagen and General Motors, with sales of the two joint ventures being around 3.7 million and 3.4 million vehicles, respectively.

According to data collected by Bruce Belzowski, director of the Future of Vehicles Department at the University of Michigan's Transportation Research Institute, the joint ventures of Hyundai-Kia, Nissan and Toyota in China are very weak compared with those of General Motors, Volkswagen and Audi in China.

While joint ventures are thriving, local Chinese companies, including world-renowned Great Wall, Geely, Chery and BYD, are facing serious challenges. Jackson pointed out, "There is no doubt that local companies need to strengthen again."

Belzowski, director of the Future of Vehicles Department at the University of Michigan Transportation Research Institute, pointed out that China still has many local automakers that need to solve the problem of overcapacity. The reason why local automakers are difficult to consolidate is that most small automakers are state-owned, and the government does not want to see auto factories being swallowed up by large companies.

Steve Golden of the Clean Diesel Technology Organization said at the conference that China's joint venture automakers currently have a market share of 60%, but because the Chinese market is currently in a price war (especially in the low-end market), joint venture automakers are also under great pressure.

Golden pointed out that although China restricts diesel vehicles, the Chinese government's encouragement of gasoline vehicles with a displacement of less than 1.6 liters has made local automakers still confident and increasingly adept at developing and producing small gasoline vehicles. Golden said that China is not only the only market with the cheapest cars, but also has the most stringent emission standards in the world. At the same time, the Chinese government's active promotion of electric vehicles has also made it difficult to strengthen a highly decentralized production system.

Sergio Muniz, a visiting researcher at the University of Michigan's Institute of Transportation Studies, said that China has become the world's largest market for new energy vehicles (including pure electric vehicles and hybrid vehicles) since 2015. The latest data presented at the conference showed that in China, where air pollution is serious, sales of new energy vehicles in 2016 will double that of 2015.

Muniz noted that the Chinese government will provide $15 billion in subsidies for new energy vehicles by 2020, covering about 60 percent of the vehicle price. Of the electric or hybrid vehicles sold in China, 95 percent are made locally, with the rest mostly luxury imports from Tesla or Porsche.

Muniz added that the Chinese government has made it easier for electric vehicles to obtain licenses in major cities to reduce pollution, reduce dependence on imported crude oil and provide China with leadership in electric vehicle technology.

Accelerate the development of car sharing and smart cars

Professor Xu Ming from the University of Michigan's College of Natural Resources pointed out that China is rapidly growing into a global leader in new business areas, such as car sharing. Professor Xu said that Chinese companies are becoming more and more adept at developing mobile clients and software that facilitate car sharing services. In addition, Chinese companies are also very keen on developing smart cars, which all participants agreed with.

John Jullens, global partner at Strategy&, a consulting firm under PwC, pointed out that "the focus of technological research in China's automotive industry has shifted from the original engine and transmission fields to artificial intelligence." A Baidu executive once told Jullens that the level of China and the United States in the field of artificial intelligence is almost the same, and it is very likely that China will surpass and become the global leader in this field.

In addition to local development, Chinese automakers are also actively expanding globally, with many already building or planning to build factories in Kazakhstan or India. Jackson of IHS Automotive Professional Research said that in the next few years, the automotive industries of countries such as Thailand, Indonesia, the Philippines, Iran, Algeria, Russia, Brazil and China will have a larger global footprint.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.