The Chinese produce 2 times more cars than they can sell (2 photos)

The Chinese automotive glut is looking for a global outlet: 40 million capacities, 123 brands, only 22 million buyers. So why is the government still subsidizing the industry?





Throughout China, automakers have car factories to produce 40 million cars annually, but car enthusiasts in China purchase only about 22 million cars in 12 months. Despite this inequality, Chinese authorities continue to invest in the development of the industry.

The problem of excess production sites in China undermines the plans of both established automakers and those promoting new technologies.

The Chinese auto industry intends to sell its electric cars abroad, which is causing concern among both Western competitors and governments. In the US, the White House is considering increasing tariff rates to protect domestic car production, while the European Union is considering Chinese subsidies for electric cars and may take similar measures.

This will lead to the question of why China is investing in an industry that is already suffering from excess capacity. This is driven by local authorities' desire to support their brands in the global market, as well as its efforts to support economic growth and preserve jobs amid wider economic challenges.

Government support means that even loss-making automakers will be able to produce more cars. That year, only 4 of the nation's 123 automakers producing electric vehicles sold more than 400,000 vehicles, a number many believe is the number an automaker needs to achieve to break even in China. These are BYD, Tesla, Aion and Wuling.

This has prompted some Chinese officials to call for consolidation of the auto industry. However, for now, the idea of expansion, supported by the national government, still prevails.

Chinese manufacturers occupied a third of the global car market



The March volume of the global car market amounted to 8.15 million cars, and, according to calculations by the local association of automakers, China accounted for 33% of them.

In the first three months of 2024, Chinese automakers shipped 470 thousand cars abroad, achieving a 40 percent year-on-year increase. Taking into account foreign brands that have located their enterprises in China and supply cars for export, the supply volume reaches 1.32 million units - this is 23% more than a year earlier.

The largest exporters from China are the concerns SAIC, Chery, Great Wall and BYD, while the latter is recognized as the leader in the supply of electrified cars: hybrids and full-fledged electric cars. Europe became the main foreign market for them, but Chinese manufacturers were able to sell about 100 thousand cars in both Americas.

Toyota took first place in the global ranking. This is the only concern whose share exceeded 10% (10.6%). In second place is Volkswagen (9.5%), in third is Hyundai (7.4%). The only brand from China included in the global top 10, albeit in last place, was Geely. In the first three months of 2024, the concern was able to sell 738,400 cars.

In total, 21.05 million cars were sold on the planet in the first quarter of 2024 - 3% more than in the same period in 2023. According to Chinese analysts, the market will continue to recover from the pandemic and the microelectronics crisis, but at a moderate pace. As expected, by the end of 2024 its volume will slightly exceed 90 million vehicles.