Strongly growing e-car market
Mercedes sees “dramatic” price war in China
07/13/2023, 10:08 p.m
With BYD, a Chinese car manufacturer top dog Volkswagen is taking the lead in the electric car segment in the first quarter. Mercedes sees the change in leadership as a warning. To keep up, Western automakers need to hand more responsibility to their own local Chinese developers.
According to Mercedes Technical Director Markus Schäfer, the electric car market in China is currently fiercely competitive in the volume segment. “The price war in China is particularly dramatic in the volume segment,” said Schäfer during an online discussion at management consultancy PwC. Even the traditional Chinese state manufacturers BAIC and SAIC, joint venture partners of Mercedes-Benz and Volkswagen, are struggling in the market currently managed by BYD.
However, Mercedes-Benz itself is focused on the premium and luxury segment. “We continue to be successful in China,” added Schäfer. However, the market share of the brand with the star in the rapidly growing Chinese e-car market is “vanishingly small,” he admitted. Including combustion models, the Swabians would have a ten to twelve percent share in their segment. The panel discussion revolved around the chances of German car manufacturers to survive in the long term in the face of competition in their most important individual market.
At the auto show in Shanghai in the spring, the many Chinese e-car brands stole the show from Western manufacturers. The fact that BYD ousted the Volkswagen brand from first place after decades caused a stir in the first quarter. According to Schäfer, being able to take a look at the market again for the first time after a three-year break due to the corona pandemic was “an aha experience”. “It was a necessary call to the entire industry at what speed you can go.” The market is completely new. “The outcome is uncertain,” added Schäfer. To keep up, Western automakers would need to give their own local Chinese developers more responsibility.
With regard to Volkswagen, PwC car expert Felix Kuhnert explained that considerable efforts were needed to ensure that the volume area was not handed over to the competition from China without a fight. PwC expects that Chinese manufacturers of e-cars will also be successful as importers to Europe. But harder times are also coming for Mercedes-Benz, BMW and Audi after a long period of dominance in China, he warned. “We expect that a similar struggle will also arise in the premium segment.” Five Chinese manufacturers are already among the top ten in this market. Stefan Bratzel, head of the Center of Automotive Management, advised German car manufacturers to adopt an aggressive mentality: “They have the power, but they don’t put it on the road like the others.”