German car brands have dominated the premium segment in China for years. Mercedes is number one here, followed by BMW and Audi. The latter two even managed to increase their sales in 2023. So are claims that German car manufacturers are on the decline in China just naysayer talk?
Julia Fiedler checked out the situation on the ground – at the Beijing Auto Show, which kicked off on Thursday. This is where the Germans are showcasing their new products, including the new G-Class. However, they are flanked more than ever by strong Chinese competition. People had already crowded around the attractive, technologically sophisticated cars from BYD and Xiaomi on the first day. The exhibition hall shows that they have long since set their sights on more than just the mass market, but also the premium class – and with remarkable skill in electromobility and connectivity.
Sean Green confirms this trend: “The battery electric vehicle segment is the most competitive in China.” In an interview by Michael Radunski, BMW’s China President and CEO predicts that BMW will remain one of the most coveted brands in the People’s Republic. As for the lower price segments, the development speed is different, he says, with chaos and often a lot of fuss about nothing. But BMW only plays a minor role there.
Nevertheless, BMW must work hard to remain on the growth path. This applies above all to design, digitalization and software expertise. Those who launch game-changers here will come out on top. “What we see in China today definitely starts to affect the rest of the world tomorrow,” Green says.
ABB – in China, this abbreviation stands for Audi, BMW and Benz. It is an acronym that stands for true institutions. The German premium manufacturers have dominated their segment for years, with Audi and BMW once again boosting their sales in 2023. However, their future in the Chinese market depends on their electric portfolio, which is not doing too well. Audi’s EV sales were even extremely poor in 2023. As the share of electric cars in the overall Chinese market could already pass the 50 percent mark by 2025, ABB urgently needs electric model growth that is more appealing to China’s customers.
The Auto China 2024 car show, which takes place from 25 April to 4 May in Beijing, is one of the most important trade shows in the world. German manufacturers will also showcase their innovations here, flanked by strong Chinese competition.
This year, 278 New Energy Vehicles (NEV, electrified vehicles) will be on show, and 117 new models will be unveiled. ABB also offers electric innovations: Audi has brought along the Audi Q6L e-tron as a highlight, which will be offered exclusively in China, BWM comes with the facelifted version of the i4 as well as the world premiere of the Mini Aceman, and Mercedes presents the electric G-Class.
Because in the spirit of transformation, the icon also had to change. The body is angular as usual, with a green core underneath: the G 580 delivers 432 kW (587 hp), a range of 570 kilometers according to CLTC (the Chinese test cycle analogous to the Worldwide Harmonised Light-Duty Vehicles Test Procedure WLTP, which is a little more generous) and a top speed of 180 km/h.
Instead of a powerful V8 engine bubbling under the hood, there now is a ‘G-roar,’ a synthetic sound for the otherwise silent off-roader. Will that work? After all, Chinese G-Class drivers love it when heads start turning as they drive the mighty off-roader through the shopping streets of Sanlitun.
Mercedes-Benz celebrates the premiere of the G 580 in a decommissioned gasholder. It is located on the edge of 798, a former factory site where artists moved into the empty brick buildings in the mid-1990s. Between industrial scrap and Mao slogans, they created their art pieces criticizing consumption and society. But then gentrification hit 798. Today, it is a hotspot for young urbanites who have made their fortune and want to show off heritage and (engineering) art: The target group of the G-Class. The price of over 140,000 euros shows that Mercedes is not targeting the mass market.
Luxury is a strategy that has worked well so far. In the segment to which the G-Class belongs, prices remain stable. Mercedes is number one here, followed by BMW and Audi. The brand wants to capitalize on its core competencies, says Mercedes CEO Ola Kallenius: timeless elegance, superior handling, and, of course, safety. However, the stiff Chinese competition, which is currently mainly active in the lower and premium segments, also wants to aim for the top class.
Of all companies, BYD, actually Volkswagen’s toughest competitor, aspires to go beyond the volume segment. The electric super sports car U9 from the Yangwang sub-brand and the massive and very successful SUV Yangwang U8 demonstrate these ambitions very impressively, says Li San, automotive expert and founder of Auto18.com.cn, who also occasionally sits down with top managers from ABB and advises them on developments in China. “BYD has now proven that they are capable of entering the luxury segment. Other large manufacturers such as GAC, FAW, SAIC and Changan are also trying to do this. They don’t have any models yet, but they will come,” he says. And so the pressure will soon increase.
The eight exhibition halls at Auto China are filled to the brim. Here, car enthusiasts flock together, with one or more bloggers reporting live from almost every car, especially at the Chinese booths. Numerous brands such as Xiaomi, Zeekr, Denza, NIO and XPeng display very attractive, technologically advanced vehicles that prove: Chinese competition dominates in the EV segment, and many cars can rightfully call themselves premium. They often cost less than 30,000 euros. A discount battle that Mercedes-Benz will not be getting into, says Mercedes CEO Ola Källenius: “It makes no sense for a brand like Mercedes-Benz to compete against the volume manufacturers. The dynamics we are seeing in the market are extreme, with incredibly intense competition in the segment below 300,000 yuan. But the Mercedes segment starts above that.”
Audi CEO Gernot Doellner shows determination. “Audi’s product range is strong. We have a clear plan for the localization and regionalization of our models, and with our partners FAW and SAIC, we have everything we need to remain a strong player in the Chinese market.”
It won’t be easy. After all, Chinese car manufacturers have caught up in quality, design and branding over the last 15 years. Or even overtake them when it comes to software and user experience. However, according to automotive expert Li San, this does not mean ABB will soon disappear. “Building a brand and delivering consistent quality takes time. The majority of middle- and upper-class Chinese still trust German car manufacturers. The automotive industry is a business that requires staying power.”
Moreover, almost all companies are losing money due to the brutal price dumping with which the NEV start-ups are trying to gain market share. How long they can hold out depends on the cash flow. That is why experts estimate that the market will soon consolidate significantly. ‘NEVs are not making any money, so I think ABB’s current strategy is the right one,’ says Li San. After all, classic gasoline cars flush money into the coffers needed for innovations. “However, you must observe the transformation closely, because the Chinese market is developing very quickly. Even if nobody is currently earning money with e-mobility, its market share is already considerable.”
According to figures from the China Passenger Car Association (CPCA), more than 50 percent of all passenger cars sold in China in the first two weeks of April were NEVs. Despite their good position in the overall Chinese premium market, Audi, Mercedes-Benz and BMW together accounted for less than 10 percent of electric cars in this segment in 2023. The stronger the penetration of electric cars becomes, the shakier ABB’s position gets.
However, even with a lower market share, growth is possible in the EV sector, as the market will continue to expand in the long term. With the right models and innovations, German premium manufacturers can continue to be successful in the long term. According to the innovation report on the German automotive industry in China 2024 by AHK Greater China, 91 percent of the companies surveyed consider product innovations to be the main success factor, with 70 percent implementing them with the help of strategic partnerships in China – universities, suppliers or customers.
Ola Källenius also emphasizes the importance of cooperation. “Both in China and the rest of the world, we choose the technology partnerships we need for our customers. But what is out of the question for us is to use the platform of another manufacturer. Anyone who buys a Mercedes will get 100 percent Mercedes.” When it comes to the rapid pace of Chinese competitors, who launch cars onto the market much faster, the Mercedes boss confidently says: “China speed is Swabian speed.”
Many foreign car manufacturers in China are under enormous pressure. How is the China business for BMW going?
It’s a very competitive market. But if you look at the BMW numbers, we had a very successful year. We grew by more than 5 percent last year, actually slightly ahead of the market. And this year we are again in a growth pace.
So things are not going badly for BMW when it comes to combustion engines. However, this isn’t the case with electromobility.
Of course, the BEV segment is the most highly competitive in China. But also here, out of the 806,000 BMWs last year, we delivered nearly 100,000 BEVs. So, we are participating in the BEV growth in China. Overall, it’s a very balanced mix. We are playing in both worlds, and I think very successfully.
Premium brands like BMW seem less susceptible to new competition from China…
The challenge of the electromobility segment in China is that the electrification takes place at different speeds in different segments. In the lower segments, in China below 250,000 renminbi, there is huge activity, a lot of noise, and a lot of new manufacturers coming in – and this is a difficult segment to be in, to be honest. But actually probably 70 percent of our portfolio is above that price level. So we are competing only to a certain extent within that segment. Above that level, we have a very strong footprint – and that drives profitability.
Software is an important purchase criterion, especially in China. It seems like Chinese manufacturers are building smartphones on four wheels. How does BMW want to keep up here?
You’re certainly right. The expectations of digital in the car from the Chinese consumer are extremely high. They expect a seamless connection from their individual digital ecosystem into the car. We set up a joint venture three years ago called BA TechWorks. It’s a 50:50 joint venture with ArcherMind in Nanjing, a very successful local software development firm that actually also supplies many of the other Chinese OEMs in the industry. They have huge expertise in automotive IT and in-car connectivity. The purpose of having this company is that we need to integrate much more Chinese content into our cars – not only for China. Because what we see in China today definitely starts to affect the rest of the world tomorrow.
For example?
‘Our”festive mode.’ On holidays like Christmas, we bring a whole digital experience into your car with sound and video. We launched it in China, and we are rolling it out around the world now because it was so well-received. And that comes from the development team in Nanjing. ‘Our ‘festive mode.’ On holidays like Christmas, we bring a whole digital experience into your car with sound and video. We launched it in China, and we are rolling it out around the world now because it was so well-received. And that comes from the development team in Nanjing.
How important are such partnerships to remain competitive?
I think it depends on the partnership. But China is innovative so it’s important to look at the innovations coming out of China. That’s what we do, for example, with Start-Up garages, where we work with very new start-up companies to see what technology, what innovation we can bring at an early stage into our cars. And, of course, we are always talking with the big tech players like Tencent and Alibaba.
Is BMW planning further collaborations in this area?
We already have a robust footprint in China, with four R&D locations nationwide: Beijing, Shenyang, Nanjing, and Shanghai. We also work with universities such as Tsinghua or Tongji University. Those partnerships are very beneficial, promoting young innovations, new companies, and great ideas at an early development phase.
How do you generally view the new competition from China?
The competition is huge, and in Chinese, they have a word with ‘Neijuan,’ which means sort of ‘involution.’ There’s a lot of innovation coming, but it doesn’t really seem to be a game changer. A lot of new brands are coming in at the same time. Some are very bright highlights, but many brands make noise and don’t seem to get that much momentum into the market.
We already see a tough selection process among Chinese manufacturers…
… clearly, too many brands are in the market, so there will be some sort of consolidation. It’s inevitable. We already saw some examples this year with Hiphi and Weltmeister stopping production.
And what about profitability?
We usually don’t comment on competitors, but I think looking at the numbers, BYD and Li Auto seem to have a strong position from a profitability perspective.
You said the situation is slightly chaotic with so many brands popping up. What are the impacts on German manufacturers like BMW?
BMW is still the most talked-about brand in China, and we still have the strongest brand strength in China. So, from a brand position, we’re still in a very strong position. Now, we have to defend our position. We’re playing in a price segment that is mostly above where the main competition sits.
What will be a key factor for defending your position?
Design, digitalization, software experience – all those things are important to the Chinese consumer. But on top of that, BMW also has product content and a design language that really attracts Chinese consumers. We’re not looking to be a mass brand. We are talking about a 4 percent share. And here design becomes probably one of the main purchase factors. If you look at some Chinese OEMs from a design stance, honestly, if you take the badges off, you would struggle to differentiate what product. BMW is different, you recognize a BMW. Whether that’s BMW, MINI or Rolls-Royce – all three brands stand for more than just being a car. This is the important factor. You have to bring this emotion, this heritage, a whole storyline.
The Chinese car market is still growing. But this development also includes the emergence of a used car market. What consequences will this have?
I think there’s a massive opportunity. We already started our own certified used car program. Last year, it grew by nearly 20 percent. Used car transactions were always a little bit of a grey system in China: and it started to really clean that up. In 2023, China offered tax adjustments to encourage the used car market. And we get a lot of support from industry bodies like the Chinese Dealer Association. Once you have an established used car network, you can start talking about leasing. That’s also still in its infancy in China. But it will come at some point and become a very interesting proposition, which can also stimulate the new car market.
Last point: overcapacity also has an impact on the car market. How big is the problem?
That depends on who you talk to. When I speak to the Chinese government, there is no overcapacity. But look at the German car market: there you have a 1 to 3 ratio, one domestic car towards three exported. So I would say you also have an overcapacity issue in Germany. Whereas in China, it’s 5 to 1. Five is domestic, one is exported. So there is still room to grow the export business until it’s in the same balance as the German market.
So do you think that overcapacity is likely to get worse?
I mean, you have to put it into context. What you see is that the Chinese government regulates and limits licensing. They are not giving out licenses for further production capacities, so they set the limits to control capacity in China.
Sean Green is President and CEO of BMW Group Region China. Green joined BMW in 1988 and held management positions in several markets and departments.
The Zhongguancun Forum (ZGC Forum) opened its doors in Beijing on Wednesday. The five-day high-tech summit showcases the latest technologies in fields such as artificial intelligence and life sciences. Over 3,100 participants from 75 countries have registered for the event in the Zhongguancun Industrial Development Zone in northwest Beijing. A highlight of the opening ceremony was the presentation of this cyborg sporting a bobbed hairstyle and a chrome-plated backside, which looks like it has come straight out of a video game.
German car brands have dominated the premium segment in China for years. Mercedes is number one here, followed by BMW and Audi. The latter two even managed to increase their sales in 2023. So are claims that German car manufacturers are on the decline in China just naysayer talk?
Julia Fiedler checked out the situation on the ground – at the Beijing Auto Show, which kicked off on Thursday. This is where the Germans are showcasing their new products, including the new G-Class. However, they are flanked more than ever by strong Chinese competition. People had already crowded around the attractive, technologically sophisticated cars from BYD and Xiaomi on the first day. The exhibition hall shows that they have long since set their sights on more than just the mass market, but also the premium class – and with remarkable skill in electromobility and connectivity.
Sean Green confirms this trend: “The battery electric vehicle segment is the most competitive in China.” In an interview by Michael Radunski, BMW’s China President and CEO predicts that BMW will remain one of the most coveted brands in the People’s Republic. As for the lower price segments, the development speed is different, he says, with chaos and often a lot of fuss about nothing. But BMW only plays a minor role there.
Nevertheless, BMW must work hard to remain on the growth path. This applies above all to design, digitalization and software expertise. Those who launch game-changers here will come out on top. “What we see in China today definitely starts to affect the rest of the world tomorrow,” Green says.
ABB – in China, this abbreviation stands for Audi, BMW and Benz. It is an acronym that stands for true institutions. The German premium manufacturers have dominated their segment for years, with Audi and BMW once again boosting their sales in 2023. However, their future in the Chinese market depends on their electric portfolio, which is not doing too well. Audi’s EV sales were even extremely poor in 2023. As the share of electric cars in the overall Chinese market could already pass the 50 percent mark by 2025, ABB urgently needs electric model growth that is more appealing to China’s customers.
The Auto China 2024 car show, which takes place from 25 April to 4 May in Beijing, is one of the most important trade shows in the world. German manufacturers will also showcase their innovations here, flanked by strong Chinese competition.
This year, 278 New Energy Vehicles (NEV, electrified vehicles) will be on show, and 117 new models will be unveiled. ABB also offers electric innovations: Audi has brought along the Audi Q6L e-tron as a highlight, which will be offered exclusively in China, BWM comes with the facelifted version of the i4 as well as the world premiere of the Mini Aceman, and Mercedes presents the electric G-Class.
Because in the spirit of transformation, the icon also had to change. The body is angular as usual, with a green core underneath: the G 580 delivers 432 kW (587 hp), a range of 570 kilometers according to CLTC (the Chinese test cycle analogous to the Worldwide Harmonised Light-Duty Vehicles Test Procedure WLTP, which is a little more generous) and a top speed of 180 km/h.
Instead of a powerful V8 engine bubbling under the hood, there now is a ‘G-roar,’ a synthetic sound for the otherwise silent off-roader. Will that work? After all, Chinese G-Class drivers love it when heads start turning as they drive the mighty off-roader through the shopping streets of Sanlitun.
Mercedes-Benz celebrates the premiere of the G 580 in a decommissioned gasholder. It is located on the edge of 798, a former factory site where artists moved into the empty brick buildings in the mid-1990s. Between industrial scrap and Mao slogans, they created their art pieces criticizing consumption and society. But then gentrification hit 798. Today, it is a hotspot for young urbanites who have made their fortune and want to show off heritage and (engineering) art: The target group of the G-Class. The price of over 140,000 euros shows that Mercedes is not targeting the mass market.
Luxury is a strategy that has worked well so far. In the segment to which the G-Class belongs, prices remain stable. Mercedes is number one here, followed by BMW and Audi. The brand wants to capitalize on its core competencies, says Mercedes CEO Ola Kallenius: timeless elegance, superior handling, and, of course, safety. However, the stiff Chinese competition, which is currently mainly active in the lower and premium segments, also wants to aim for the top class.
Of all companies, BYD, actually Volkswagen’s toughest competitor, aspires to go beyond the volume segment. The electric super sports car U9 from the Yangwang sub-brand and the massive and very successful SUV Yangwang U8 demonstrate these ambitions very impressively, says Li San, automotive expert and founder of Auto18.com.cn, who also occasionally sits down with top managers from ABB and advises them on developments in China. “BYD has now proven that they are capable of entering the luxury segment. Other large manufacturers such as GAC, FAW, SAIC and Changan are also trying to do this. They don’t have any models yet, but they will come,” he says. And so the pressure will soon increase.
The eight exhibition halls at Auto China are filled to the brim. Here, car enthusiasts flock together, with one or more bloggers reporting live from almost every car, especially at the Chinese booths. Numerous brands such as Xiaomi, Zeekr, Denza, NIO and XPeng display very attractive, technologically advanced vehicles that prove: Chinese competition dominates in the EV segment, and many cars can rightfully call themselves premium. They often cost less than 30,000 euros. A discount battle that Mercedes-Benz will not be getting into, says Mercedes CEO Ola Källenius: “It makes no sense for a brand like Mercedes-Benz to compete against the volume manufacturers. The dynamics we are seeing in the market are extreme, with incredibly intense competition in the segment below 300,000 yuan. But the Mercedes segment starts above that.”
Audi CEO Gernot Doellner shows determination. “Audi’s product range is strong. We have a clear plan for the localization and regionalization of our models, and with our partners FAW and SAIC, we have everything we need to remain a strong player in the Chinese market.”
It won’t be easy. After all, Chinese car manufacturers have caught up in quality, design and branding over the last 15 years. Or even overtake them when it comes to software and user experience. However, according to automotive expert Li San, this does not mean ABB will soon disappear. “Building a brand and delivering consistent quality takes time. The majority of middle- and upper-class Chinese still trust German car manufacturers. The automotive industry is a business that requires staying power.”
Moreover, almost all companies are losing money due to the brutal price dumping with which the NEV start-ups are trying to gain market share. How long they can hold out depends on the cash flow. That is why experts estimate that the market will soon consolidate significantly. ‘NEVs are not making any money, so I think ABB’s current strategy is the right one,’ says Li San. After all, classic gasoline cars flush money into the coffers needed for innovations. “However, you must observe the transformation closely, because the Chinese market is developing very quickly. Even if nobody is currently earning money with e-mobility, its market share is already considerable.”
According to figures from the China Passenger Car Association (CPCA), more than 50 percent of all passenger cars sold in China in the first two weeks of April were NEVs. Despite their good position in the overall Chinese premium market, Audi, Mercedes-Benz and BMW together accounted for less than 10 percent of electric cars in this segment in 2023. The stronger the penetration of electric cars becomes, the shakier ABB’s position gets.
However, even with a lower market share, growth is possible in the EV sector, as the market will continue to expand in the long term. With the right models and innovations, German premium manufacturers can continue to be successful in the long term. According to the innovation report on the German automotive industry in China 2024 by AHK Greater China, 91 percent of the companies surveyed consider product innovations to be the main success factor, with 70 percent implementing them with the help of strategic partnerships in China – universities, suppliers or customers.
Ola Källenius also emphasizes the importance of cooperation. “Both in China and the rest of the world, we choose the technology partnerships we need for our customers. But what is out of the question for us is to use the platform of another manufacturer. Anyone who buys a Mercedes will get 100 percent Mercedes.” When it comes to the rapid pace of Chinese competitors, who launch cars onto the market much faster, the Mercedes boss confidently says: “China speed is Swabian speed.”
Many foreign car manufacturers in China are under enormous pressure. How is the China business for BMW going?
It’s a very competitive market. But if you look at the BMW numbers, we had a very successful year. We grew by more than 5 percent last year, actually slightly ahead of the market. And this year we are again in a growth pace.
So things are not going badly for BMW when it comes to combustion engines. However, this isn’t the case with electromobility.
Of course, the BEV segment is the most highly competitive in China. But also here, out of the 806,000 BMWs last year, we delivered nearly 100,000 BEVs. So, we are participating in the BEV growth in China. Overall, it’s a very balanced mix. We are playing in both worlds, and I think very successfully.
Premium brands like BMW seem less susceptible to new competition from China…
The challenge of the electromobility segment in China is that the electrification takes place at different speeds in different segments. In the lower segments, in China below 250,000 renminbi, there is huge activity, a lot of noise, and a lot of new manufacturers coming in – and this is a difficult segment to be in, to be honest. But actually probably 70 percent of our portfolio is above that price level. So we are competing only to a certain extent within that segment. Above that level, we have a very strong footprint – and that drives profitability.
Software is an important purchase criterion, especially in China. It seems like Chinese manufacturers are building smartphones on four wheels. How does BMW want to keep up here?
You’re certainly right. The expectations of digital in the car from the Chinese consumer are extremely high. They expect a seamless connection from their individual digital ecosystem into the car. We set up a joint venture three years ago called BA TechWorks. It’s a 50:50 joint venture with ArcherMind in Nanjing, a very successful local software development firm that actually also supplies many of the other Chinese OEMs in the industry. They have huge expertise in automotive IT and in-car connectivity. The purpose of having this company is that we need to integrate much more Chinese content into our cars – not only for China. Because what we see in China today definitely starts to affect the rest of the world tomorrow.
For example?
‘Our”festive mode.’ On holidays like Christmas, we bring a whole digital experience into your car with sound and video. We launched it in China, and we are rolling it out around the world now because it was so well-received. And that comes from the development team in Nanjing. ‘Our ‘festive mode.’ On holidays like Christmas, we bring a whole digital experience into your car with sound and video. We launched it in China, and we are rolling it out around the world now because it was so well-received. And that comes from the development team in Nanjing.
How important are such partnerships to remain competitive?
I think it depends on the partnership. But China is innovative so it’s important to look at the innovations coming out of China. That’s what we do, for example, with Start-Up garages, where we work with very new start-up companies to see what technology, what innovation we can bring at an early stage into our cars. And, of course, we are always talking with the big tech players like Tencent and Alibaba.
Is BMW planning further collaborations in this area?
We already have a robust footprint in China, with four R&D locations nationwide: Beijing, Shenyang, Nanjing, and Shanghai. We also work with universities such as Tsinghua or Tongji University. Those partnerships are very beneficial, promoting young innovations, new companies, and great ideas at an early development phase.
How do you generally view the new competition from China?
The competition is huge, and in Chinese, they have a word with ‘Neijuan,’ which means sort of ‘involution.’ There’s a lot of innovation coming, but it doesn’t really seem to be a game changer. A lot of new brands are coming in at the same time. Some are very bright highlights, but many brands make noise and don’t seem to get that much momentum into the market.
We already see a tough selection process among Chinese manufacturers…
… clearly, too many brands are in the market, so there will be some sort of consolidation. It’s inevitable. We already saw some examples this year with Hiphi and Weltmeister stopping production.
And what about profitability?
We usually don’t comment on competitors, but I think looking at the numbers, BYD and Li Auto seem to have a strong position from a profitability perspective.
You said the situation is slightly chaotic with so many brands popping up. What are the impacts on German manufacturers like BMW?
BMW is still the most talked-about brand in China, and we still have the strongest brand strength in China. So, from a brand position, we’re still in a very strong position. Now, we have to defend our position. We’re playing in a price segment that is mostly above where the main competition sits.
What will be a key factor for defending your position?
Design, digitalization, software experience – all those things are important to the Chinese consumer. But on top of that, BMW also has product content and a design language that really attracts Chinese consumers. We’re not looking to be a mass brand. We are talking about a 4 percent share. And here design becomes probably one of the main purchase factors. If you look at some Chinese OEMs from a design stance, honestly, if you take the badges off, you would struggle to differentiate what product. BMW is different, you recognize a BMW. Whether that’s BMW, MINI or Rolls-Royce – all three brands stand for more than just being a car. This is the important factor. You have to bring this emotion, this heritage, a whole storyline.
The Chinese car market is still growing. But this development also includes the emergence of a used car market. What consequences will this have?
I think there’s a massive opportunity. We already started our own certified used car program. Last year, it grew by nearly 20 percent. Used car transactions were always a little bit of a grey system in China: and it started to really clean that up. In 2023, China offered tax adjustments to encourage the used car market. And we get a lot of support from industry bodies like the Chinese Dealer Association. Once you have an established used car network, you can start talking about leasing. That’s also still in its infancy in China. But it will come at some point and become a very interesting proposition, which can also stimulate the new car market.
Last point: overcapacity also has an impact on the car market. How big is the problem?
That depends on who you talk to. When I speak to the Chinese government, there is no overcapacity. But look at the German car market: there you have a 1 to 3 ratio, one domestic car towards three exported. So I would say you also have an overcapacity issue in Germany. Whereas in China, it’s 5 to 1. Five is domestic, one is exported. So there is still room to grow the export business until it’s in the same balance as the German market.
So do you think that overcapacity is likely to get worse?
I mean, you have to put it into context. What you see is that the Chinese government regulates and limits licensing. They are not giving out licenses for further production capacities, so they set the limits to control capacity in China.
Sean Green is President and CEO of BMW Group Region China. Green joined BMW in 1988 and held management positions in several markets and departments.
The Zhongguancun Forum (ZGC Forum) opened its doors in Beijing on Wednesday. The five-day high-tech summit showcases the latest technologies in fields such as artificial intelligence and life sciences. Over 3,100 participants from 75 countries have registered for the event in the Zhongguancun Industrial Development Zone in northwest Beijing. A highlight of the opening ceremony was the presentation of this cyborg sporting a bobbed hairstyle and a chrome-plated backside, which looks like it has come straight out of a video game.
