Car manufacturers hope for China

For the first time since the beginning of the corona pandemic, the automotive world is coming together again in China for a major trade fair. The prospects for the largest car market are good – but the dependency on China is also growing.

Visitors to the Beijing Motor Show try the new Mercedes V260 L SPV.

In the global corona crisis, German and international carmakers have high hopes for the recovery in China. At the start of the international motor show on Saturday in Beijing, experts predicted further growth in the world’s largest car market in China by the end of the year and also next year. While business has plummeted worldwide, the importance of China is still growing. It has been described as an “essential support pillar” or “lifeline”. “Auto China 2020” is the industry’s first major international exhibition in more than a year.

Since China has the corona virus largely under control and has barely counted local infections for a long time, the exhibition, which was initially postponed in spring, could be rescheduled. In previous years, the annual fair, which takes place alternately in Shanghai and Beijing and is one of the largest in the automotive industry, has attracted millions of visitors. For fear of the introduction of the virus, strict restrictions on entry and two weeks of quarantine still apply in China. There are also only a few flights to China.

“I expect very good sales in the second half of the year,” said Cui Dongshu from China’s Passenger Car Association (CPCA) to the German Press Agency in Beijing. After the sharp slump due to the pandemic in the first half of the year, the expected decline for the entire year will decrease to a minus of only five to eight percent. Despite all the uncertainties, the expert expects an increase of eight percent in the coming year. Other experts also expect an increase of five to seven percent.

“Without China, the German auto industry would be hard to recognize,” said Ferdinand Dudenhöffer from the Center for Automotive Research (CAR) in Duisburg. Mercedes suffered a global decline of 20 percent in the second quarter, but sales in China increased by 22 percent, the expert explained the situation. At BMW it looked “even more blatant”: a global slump of 25 percent was offset by an increase of 17 percent in China in the second quarter.

“During the pandemic, China has gained significantly in importance for German carmakers,” said Dudenhöffer. The VW group sold 40 percent of its cars worldwide this year in China. Being heavily dependent on a large region is always a risk, he said. “But the question is which risk is greater: Dependence on China or becoming a niche supplier in China?”

China is very interested in working with Germany. According to the expert, risks could be made “manageable” and “bearable”. The United States under President Donald Trump is a much greater risk because it is unpredictable: “If Trump has a bad day and needs a few votes, he will raise tariffs on the German auto industry overnight.” Brings losses.

Where the market in Europe and the United States is not doing so well, it shows “how dramatically important this market is,” said Stefan Bratzel from the Center of Automotive Management (CAM). “China is more than a beacon of hope, it is an important anchor especially for German carmakers.” No manufacturer can afford to exclude this market. “But now you have to be very careful not to neglect the other markets either.”

The growing dependency is not without problems. “If the market gets a problem and you are over-proportionally active there, then you can get into turbulence,” said Bratzel. “A very high market share in China, of course, also means a kind of dependency on political dimensions and even blackmail.”

Behind the turnaround in the auto business lies the economic recovery in China, which is the first major economy to show growth again. People’s fear of using public transport during the pandemic is also a motivating factor for buying a car. Sales of passenger cars rose in August by 8.8 percent compared to the same month last year to 1.73 million – after an increase of 7.9 percent in July. Electric vehicles sold faster, increasing 45 percent in August to 82,500.