58 percent of Chinese car brands are less than 10 years old

The world’s largest car market has almost 100 brands belonging to 40 automotive groups.

In the immediate aftermath of the 2008-2011 financial crisis and the 2010-2013 European economic recession, the automotive industry saw a considerable number of brands go out of business.

The crisis has had a direct impact on sales and has reduced the volume of markets. As the strong growth seen in the late 1990s and early 2000s faded, many automakers were forced to shed their weaker car brands.

GM slimming cure

General Motors is probably the manufacturer that has suffered the most. By the late 1990s, this portfolio included nine different brands. Today there are only four left. Chrysler and Ford have also dropped some of their brands in the past 20 years: Plymouth, Eagle and Mercury to name a few. In Europe, brands such as Rover and Saab have disappeared, while others such as Lancia have been relegated to a single model.

Meanwhile, in China, the situation is practically the opposite. In the early years of this century, the Chinese market had about 25 brands. At the time, the Asian country mainly produced imitations of old European and Japanese cars that were sold locally in a still small market. Between 2001 and 2010, 14 more car brands arrived.

China was becoming a safe haven not only for domestic manufacturers, but also for Western brands struggling with the economic crisis. As of 2008, China’s automobile industry is the world’s largest in terms of automobile production. Since then, growth has been exponential.

China Baby Brands

As demand continues to grow and Chinese consumer incomes rise, the industry has begun to introduce more models with new brands. Between 2011 and 2015, a total of 12 new brands entered the local market: Maxus, Beijing Auto, VGV, Haval, Xpeng, Nio, Cowin (currently Kaiyi), Hozon, Leap Motor, Weltmeister, Enovate and Li Auto.

The arrival of the electric vehicle and its consequent popularity, along with the central government’s strong commitment to its correct positioning, has favored the appearance of brands even more than in the previous period considered.

Between 2016 and today, there are more than 50 new car companies in the region, giving Chinese consumers a total of 99 different brands to choose from. And as such, the Chinese auto manufacturing sector is large and very young: 58% is less than 10 years old.

Much of this exponential growth of brands can be explained by the interest of local automotive groups to be recognized as innovative and in line with the electric vehicle boom.

China, the largest car market in the world

China is the world’s largest light vehicle market, with around 25 million units sold annually. Last year it accounted for nearly 32 percent of global auto sales, or the equivalent of the combined deliveries of the US, India, Japan and Germany.

So there are plenty of opportunities for everyone. For this reason, the strategy, as was the case in the American market in the 70s and 80s, is to expand the offer by introducing more shared models with different brands and positioning. The 99 brands currently available are gathered in around 40 automotive groups. However, not all are successful. In recent years, some brands have fallen due to low sales.

The dynamics of the Chinese car market are unique. Massive local demand, strong government support and commitment to electric vehicle development are the perfect setting for the introduction of new brands. Six brands have been introduced this year alone and three more are expected to hit the roads in December.

Europe, the United States, Japan and Korea cannot tell the same story. In reality, in the last eight years, only a few brands have been introduced or revived: Alpine, Polestar, Cupra, Jetta, Genesis, RAM and DS.

The author of the article, Felipe Muñoz, is a specialist in the automotive industry at JATO Dynamics.