Darwin's Showroom
Hello Wanderers,
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In this world where sadly there are actual real wars bringing death and destruction, there is also a real fight for survival unfolding in the Chinese automotive industry. Over 100 brands are battling for the attention of a tremendously spoiled Chinese shopper.
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After years of launching one new brand after another, Chinese manufacturers are beginning to focus on efficiency. Changan, one of the big four state owned groups in China, has announced the integration of large parts of its Deepal and Avatr divisions after a sales plunge at that last one. While still keeping a separate identity in the market, they will have to share their R&D, manufacturing and supply chains. While that sounds easy to do, infighting at for example VW has shown that plans that look good on paper don't always translate well in the real world populated with ego's. Consumers are also quick to catch on if the shared resources lead to a jumble of brands that lack real identity, here's looking at you Stellantis.
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Quite a few manufacturers are probably also nervously eying the results of their owner. The wildly popular Xiaomi brands' mother company announced less than stellar results for example. The maker of everything from phones to fridges saw its profit drop more than expected due to the steep price increases of components like memory chips. While the car division is having great success with its products, it is also still severely loss making. Not an ideal position to be in when the people at the top start piling on pressure to improve the financial results.
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Where to go then to let off the pressure? One destination seems to be on every players mind: Europe. And especially BYD has positioned itself admirably to maintain maximum flexibility. With a fleet of eight car-carriers they can both increase the exports from a tight Chinese market and evade the war linked volatility.
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If you want a feel of just how big the pressure in China is, head over to the ACEA report section. China was by far the biggest market in terms of registrations, with over 24 million cars registered in 2025. But they produced 5 million more and have an estimated capacity to produce over 40 million cars annually. In a business where utilization rate of your factories is a driving factor of your profitability, you can understand where that spells trouble. The next few years will show who are the winners and losers.
Grtz
Pieter
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