China - Automotive IndustryChina - Automotive Industry
OverviewChina continues to be the world’s largest vehicle market with the Chinese government expecting that automobile output will reach 30 million units by 2020 and 35 million by 2025. According to the China Association of Automobile Manufacturers, over 27 million vehicles were sold in 2018. This included 23.79 million passenger vehicles, down 4.08% from 2017, and 4.38 million commercial vehicles, an increase of 5.05%. The decline in passenger vehicle sales is the first annual decline in at least 20 years.
(Unit: # of vehicles)
|Chinese Vehicle Production||23,491,900||24,597,600||28,028,000||29,015,000||27,809,000|
|Chinese New Energy Vehicle Production||74,763||340,471||517,000||794,000||1,500,000|
|Chinese Vehicle Exports||950,000||755,500||708,000||1,063,800||1 ,041,000|
|Chinese Imports of Foreign Vehicles||1,430,000||1,101,900||1,041,000||1,246,800||1,140,000|
|Chinese Vehicle Imports from the United States||291,690||307,425||235,760||280,208||190,100|
|Vehicles Purchased in China||22,833,590||24,944,000||28,361,000||29,198,000||27,908,000|
Sources: Global Trade Atlas, Ministry of Industry and Information Technology, China Association of Automobile Manufacturers
Effective July 1, 2018, China trimmed tariffs on imported cars from 25% to 15% of their wholesale value. It also cut tariffs on 218 categories of imported car parts, reducing them to a standardized 6%. However, in June 2018, China imposed an additional 25% tariff on $50 billion in U.S. imports with $34 billion taking effect on July 6, 2018 and the balance of $16 billion on August 23. This tariff included most U.S. made autos and auto parts at rates between 5% and 25%. In December 2018, China announced that it would temporarily suspend these new tariffs on autos and auto parts until March 31, 2019. As of June 1, 2019, these retaliatory tariffs on auto parts will go into force. In addition to tariffs, all autos in China are subject to an engine displacement-based consumption tax that can reach 40% for the largest engines. Also, all passenger cars and medium and small size commercial vehicles valued 1.3 million RMB excluding VAT (approximately $188,000) and above are subject to an additional 10% “Luxury Car Consumption Tax”.
Autos, including new energy vehicles (NEVs), are one of 10 sectors of the Made in China 2025 program, a government initiative to upgrade the country’s industry from low cost mass production to higher value-added advanced manufacturing. For NEVs, the government’s goal is to produce 1 million electric and plug-in hybrid cars in China by 2020, with domestic production accounting for at least 70% of the country’s market share. Moreover, China aims to sell 3 million domestically branded NEV’s in 2025 with a minimum of 80% of the country’s NEV market share. China’s “Automobile Mid and Long-Term Development Plan”, released in April 2017, supports this initiative; aiming to make China a “strong” auto power within ten years. This plan highlights the development of NEVs and connected and autonomous vehicles as an opportunity for China to dominate this emerging market. Several ambitious targets have been set relating to the creation of national champions in auto parts/brands, connected car technology, driver assistance, and autonomous systems. Additional guidelines focus on NEV engines, plug-in hybrid engines, fuel cell systems and key components, charging stations, battery manufacturing facilities, and testing equipment.
Historically, consumer level subsidies, from both the central and provincial/municipal governments, have played a significant role in spurring domestic NEV sales. Though the stated aim of these subsidies is to support the development of the domestic NEV industry, since imported vehicles do not qualify, it also has the effect of making imported vehicles less cost competitive. MIIT announced in March 2019 that it would cut the maximum subsidies by 50% for 2019 and phase out all subsidies by the end of 2020, which will increase the price competitiveness of imported vehicles.
As China moves away from its consumer-level subsidy program, the government has introduced a fleet quota system specifying that automakers, including joint ventures and auto importers, are required to manufacture or import a minimum percentage of NEVs relative to their total manufacturing or importing. The 2019 NEV production quota is 10% of total produced vehicles and 12% for 2020 based on a credit system which reduces the total requirement. Quotas for 2021 and beyond have not yet been released. Automakers that do not meet these targets are required to purchase NEV credits from other automakers that exceeded the production quotas or forgo sales of some amount of internal combustion engine vehicles.
The Chinese parts and repair aftermarket is projected to reach $188 billion by 2020. The Chinese automotive parts market is dominated by foreign and joint venture companies with a 70% revenue share in2017.
Specialty Auto Parts
China’s specialty auto parts market reached approximately $3.5 million in 2018, registering an annual growth rate of about 30%. The car modification business remains popular in some developed cities despite the fact that China’s “Road Safety Law” essentially prohibits modifications. Nonetheless, foreign specialty equipment companies have seen the market potential. The International Trade Administration (ITA) continues to engage with Chinese industry and government representatives on aftermarket issues and has provided information on how the United States regulates its aftermarket, including specialty equipment. The Specialty Equipment Market Association (SEMA) has a Market Development Cooperator Program (MDCP) award with ITA to help U.S. specialty parts companies grow their exports to China.
China’s RV market has undergone significant changes over the past several years, including a national focus on the development of tourism, campgrounds and the RV industry. With a growing demand for RVs and a shift in consumers' travel preferences, tourism experts in China anticipate a surge of RV-related businesses in the coming years. In 2017, China ranked second as a destination market for U.S. RVs with exports totaling $19.9 million compared to $13.7 million in 2016. Of these exports, towable RVs (travel trailers) comprised 76% of RV exports with motorhomes making up the remaining 24%. In 2018, U.S. RV exports to China dropped to $3 million with towable units accounting for 60% of exports. This decline was primarily due to increased tariffs imposed that year. According to the “2018 Top Markets Report: Recreational Transportation,” it is estimated that Chinese consumers could purchase up to 500,000 RVs by 2020.
Autonomous and Connected Vehicles
The nascent industry of autonomous driving vehicles (ADV), as a priority sector for development in China, presents new areas of opportunity for high quality automotive component and IT companies. “The Connected Vehicle Industry Development Plan 2020” sets specific goals for ADVs including the reduction of vehicle traffic accidents by 30%, increase traffic efficiency by 10%, and decrease fuel consumption by 5%. The plan also calls for at least 50% of the vehicles being equipped with driver assistance (DA), partial assistance (PA) or conditional assistance (CA). The development of ADVs in China faces challenges relating to standards development, on-road testing, cyber security, geographic data collection, and intellectual property protection amongst others.
Chengdu International Trade Fair for Automotive Parts and Aftermarket Services
Chengdu, May 23-25
All in Caravaning
Beijing, June 14-16
China International Motorcycle Trade Exhibition
Chongqing, September 20-23
China International Auto Modification and Accessories Expo
Shanghai October 13-15
Ministry of Transport of China (MOT): http://www.mot.gov.cn
China Associations of Automobile Manufacturers (CAAM): http://www.caam.org.cn/
China Automobile Dealers Association: http://www.china-cada.org.cn
China Automotive Technology and Research Center (CATARC): http://www.catarc.ac.cn/ac_en/
Ministry of Commerce (MOFCOM): http://www.mofcom.gov.cn
Certification and Accreditation Administration (CCC Certification): http://www.cnca.gov.cn/
Ministry of Information and Technology (MIIT): http://www.miit.gov.cn
U.S. Commercial Service Contacts for Automotive Sector
U.S. Embassy Beijing
Jessica (Feng) Tan, Commercial Specialist
U.S. Consulate Shanghai
Lisa (Beilei) Ouyang, Commercial Specialist
U.S. Consulate Guangzhou
Roya Xie, Commercial Specialist
U.S. Consulate Chengdu
Flora Fan, Commercial Specialist
U.S. Consulate Shenyang
Dongmei Sun, Commercial Specialist
T: +86-24-2322-1198 * 8142
U.S. Consulate Wuhan
Catherine Le, Commercial Specialist
T: +86-27-8555-7791 * 2808
China Automotive Trade Development and Promotion