International manufacturers are confronted with a difficult situation in China due to the market for conventionally fueled vehicles’ fierce pricing rivalry and stalling sales. It is challenging for businesses that are lagging behind in the electric vehicle (EV) industry to commit enough capital to make the switch to this cutting-edge technology because of the intense competition in this market.
Mitsubishi Motors announced its departure from the Chinese automotive industry, citing subpar sales figures. After that, the GAC Mitsubishi signage was taken down, and in just two months, the location had been completely erased to become an EV dealership for IM Motors, a state-owned SAIC Motor subsidiary. This was done in late December. The difficulties faced by Mitsubishi Motors in the Chinese market in 2023 were not exclusive. Honda Motor had a 10% drop in revenue.
In 2023, sales of internal combustion engine (ICE) passenger cars, including hybrids, fell by 7%. This slump suggests that the sales decreases for Nissan and Honda have exceeded the general shrinkage of the market for these kinds of cars.
In contrast, even if the market for passenger automobiles as a whole grew by only 4% in 2023, the market for new energy vehicles (NEVs), which include EVs, plug-in hybrids, and fuel cell vehicles, soared by over 30%. Domestic Chinese EV producers, like as BYD, quickly grew their product lines in an effort to compete with their Western rivals, who adopted NEV technologies more slowly. The main brand of General Motors, Buick, saw a notable 20% decline in sales in 2023, while the Volkswagen Group managed a meager 2% growth to 3.23 million units.
The intense pricing competition that went beyond the EV industry made things worse for international automakers. Early in 2023, Tesla began offering significant discounts on its electric vehicles (EVs), which led Chinese NEV manufacturers to follow suit. Prices in the ICE car market started to decline as well, according to Chinese automakers.
The average discount per vehicle in China from January to September was 26,000 yuan ($3,600), a significant rise over the average of 15,000 to 20,000 yuan observed in 2021 and 2022. The average discount for ICE cars in September was more than 30,000 yuan, much more than the 10,000 yuan or more that NEVs received.
Out of all the major international brands, Jaguar from the United Kingdom offered the most average discount of 115,000 yuan between January and September. BMW made cuts after that.
