Understanding Europe crucial for Chinese carmakers

Chinese carmakers will help galvanize the vehicle market in Europe, but if they want to secure a foothold, they need to gain a deep understanding of the destination, said the chief economist of London-based Autovista Group, a pan-European and Australian automotive data, analytics and industry insights provider.

In an interview with China Daily on Saturday, Christof Engelskirchen said he felt "so much excitement and energy" at the Beijing auto show that runs from April 25 to May 4, which boasts an atmosphere of innovation rarely seen elsewhere.

"If we can bring that over (to Europe) and create the excitement about what the car can offer, that would be a positive development, for the (European) customers and also for competition," he said.

Engelskirchen said China's automotive industry has "waken up" in the past 10 years and now they offer better products and better technology. At the auto show, some of the exhibitors have made it a point to prepare information for overseas visitors, including potential dealers and reporters.

"You feel like that you are at an international show, not a regional one. It is more international than I had expected," he said.

Many Chinese carmakers have unveiled their go-global strategies. Among others, Voyah, which has already opened showrooms in some European countries, is planning to be available throughout Europe in two years.

Europe and Southeast Asia are two major destinations of Chinese NEV makers' increasing exports, according to the China Association of Automobile Manufacturers.

Great Wall Motor, China's largest SUV maker, expects to scale up its overseas sales to 1 million units by 2030 from 300,000 units in 2023.

Engelskirchen said Chinese brands, due to their speed, innovation as well as vertical integration, have a good chance of winning their shares in China and across the globe.

But he was also quick to add that they should study each of the destination markets carefully because they could be "extremely different".

In the eyes of Chinese carmakers, Europe is usually seen as one region, but European countries differ from each other in so many aspects such as customer preferences, automotive policies, as well as the availability of a strong local automotive industry.

In other words, they need to first find out in what segment and what country lies the potential for their vehicles and the size of the market, he said.

Another thing is that the residual value of the vehicles matters, which will prove crucial when the carmakers work with local banks to tailor financial solutions, because roughly 50 percent of new car sales in Europe are lease deals.

Facing the general car buyers, the carmakers need to differentiate themselves from those already established in the market, said Engelskirchen.

"There are already so many brands, so many models. So if someone comes with a new product, there must be something new, " he said. "It cannot just be 'good product, good quality, good price and good design', it is too 'me too'."

Engelskirchen also emphasized the importance of the consistency of a brand's tag, be it better connectivity and a longer range. "It is not all about 'luxury' or the best quality. That is not it. It is a consistent story that sticks."

He said Xiaomi, which launched its first model in March, seems a "fantastic story" in China. Its CEO Lei Jun moved from booth to booth at the Beijing auto show, followed by hundreds of cameras and mobile phones. "This type of hype around a brand, I think, will be difficult to be replicated in Europe."