Latest / Motor Trade Radio / CHINESE BRANDS SPECIAL: What's next for Chinese car makers? Industry analyst Felipe Munoz shares his views on European and global trends (E47, S12)

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CHINESE BRANDS SPECIAL: What's next for Chinese car makers? Industry analyst Felipe Munoz shares his views on European and global trends (E47, S12) · Motor Trade Radio

• 0:04
  Speaker: Hello and welcome to the Motortrade radio podcast powered
• 0:08
  Speaker: by Kazu, with Philip Lockhart and Curtis Hutchinson bringing
• 0:13
  Speaker: you all the chatter that matters across the car retailing sector,
• 0:17
  Speaker: from factory to forecourt.
• 0:24
  Speaker: Hello and welcome to this
• 0:26
  Speaker: special Motortrade Radio Weekday
• 0:28
  Speaker: podcast interview.
• 0:30
  Speaker: Today, we're delighted to be joined by Philippe Manu's
• 0:33
  Speaker: respected automotive industry analyst and speaker.
• 0:38
  Speaker: Philippe's research on global
• 0:40
  Speaker: car industry trends have fed on
• 0:42
  Speaker: a regular basis on LinkedIn,
• 0:44
  Speaker: providing a reliable source of
• 0:47
  Speaker: unique insight on the auto
• 0:49
  Speaker: industry across Europe, Asia and
• 0:53
  Speaker: the US.
• 0:54
  Speaker: He also posts regular blogs on
• 0:56
  Speaker: his Car industry analysis
• 0:58
  Speaker: Newsletter.
• 1:00
  Speaker: Links to both pages are in this episode's show notes.
• 1:04
  Speaker: Phillip and I are both big fans.
• 1:06
  Speaker: We do recommend you follow Phillip.
• 1:09
  Speaker: Phillip joins us today to share his views, insight, and research
• 1:13
  Speaker: on Chinese car makers covering established players, new
• 1:18
  Speaker: entrants, and brands heading to Europe over the course of the
• 1:22
  Speaker: next twenty four months or so.
• 1:25
  Speaker: So welcome back to the pod, Phillip.
• 1:27
  Speaker: I can't believe it's actually over a year since we last had
• 1:30
  Speaker: you on the show.
• 1:30
  Speaker: So welcome back.
• 1:32
  Speaker: Well, thank you very much, Curtis and Phillip.
• 1:35
  Speaker: Uh, yes, it's been a long time
• 1:37
  Speaker: already since our last
• 1:38
  Speaker: conversation.
• 1:39
  Speaker: Time flies, but it's always good
• 1:41
  Speaker: to catch up and talk to you
• 1:43
  Speaker: about what's going on in this
• 1:45
  Speaker: fascinating industry.
• 1:46
  Speaker: There's a lot happened in your world as well, Phillip, in that
• 1:49
  Speaker: since we last spoke as well.
• 1:51
  Speaker: I know many things have changed.
• 1:54
  Speaker: I'm now, uh, trying to do my own stuff, my own business as a
• 2:00
  Speaker: consultant, as a speaker analyst, which is my passion and
• 2:04
  Speaker: is what it has, has taken me many to many places just
• 2:09
  Speaker: following the industry trends.
• 2:11
  Speaker: Yeah.
• 2:12
  Speaker: Yeah, we certainly the
• 2:13
  Speaker: automotive industry certainly
• 2:15
  Speaker: keeps you busy with everything
• 2:17
  Speaker: going on very much and very
• 2:19
  Speaker: much.
• 2:19
  Speaker: It's it's changing all the time.
• 2:21
  Speaker: And now we have one crisis after the other one new challenges,
• 2:28
  Speaker: new technologies, new players.
• 2:30
  Speaker: So every day there is something to tell.
• 2:32
  Speaker: Yeah, exactly.
• 2:34
  Speaker: I mean, I echo what Curtis said.
• 2:36
  Speaker: I mean, you know, I follow a lot of what you push out there.
• 2:39
  Speaker: And I mean, I'm privileged that chair of the VRE have also, um,
• 2:44
  Speaker: got you involved with our summit this year in November.
• 2:47
  Speaker: So, um, right.
• 2:49
  Speaker: The honor of you coming over to the, the UK and being a fireside
• 2:53
  Speaker: chat guest with me at the, the forthcoming, via a summit down
• 2:58
  Speaker: in Warwick in November.
• 2:59
  Speaker: So I'm really looking forward to you in person.
• 3:02
  Speaker: I mean, we spoke a few times, obviously over the phone but
• 3:04
  Speaker: never actually met, so I'm really looking forward to that.
• 3:07
  Speaker: So it's an absolute honour to have you back on and a pleasure
• 3:09
  Speaker: to be speaking to you.
• 3:10
  Speaker: And so let's let's start off
• 3:12
  Speaker: with, um, some of the, you know,
• 3:14
  Speaker: the research you've been
• 3:15
  Speaker: publishing recently and tracking
• 3:18
  Speaker: some of the challenges and
• 3:19
  Speaker: issues facing Chinese car makers
• 3:21
  Speaker: in their sort of domestic market
• 3:24
  Speaker: and the sales progress, uh, many
• 3:27
  Speaker: of them are making in the export
• 3:30
  Speaker: markets.
• 3:30
  Speaker: Do you want to talk us through some of this analysis and
• 3:33
  Speaker: research that you've been, you've been looking at?
• 3:35
  Speaker: Well, yeah.
• 3:36
  Speaker: Um, as many, probably many of
• 3:40
  Speaker: you know, uh, the hot topic in
• 3:42
  Speaker: the industry, especially in
• 3:43
  Speaker: Europe, is, uh, how fast the
• 3:45
  Speaker: Chinese car makers are gaining
• 3:47
  Speaker: traction.
• 3:48
  Speaker: And this is not only happening in Europe, it's basically
• 3:51
  Speaker: everywhere where they're allowed to sell their cars.
• 3:54
  Speaker: A because they are very
• 3:56
  Speaker: competitive and, uh, their cars
• 3:59
  Speaker: are in many cases, they are even
• 4:02
  Speaker: at, uh, in a better position
• 4:05
  Speaker: regarding quality than many
• 4:07
  Speaker: traditional car makers that we
• 4:09
  Speaker: know.
• 4:10
  Speaker: So, uh, I've been trying to, to follow this new trend, how fast
• 4:17
  Speaker: they are growing, how fast they are, uh, gaining traction and in
• 4:22
  Speaker: Europe is, is not the exception.
• 4:24
  Speaker: If, even if it is, uh, a quite
• 4:27
  Speaker: competitive market with a lot of
• 4:30
  Speaker: regulation and with very strong
• 4:32
  Speaker: players which want to protect
• 4:36
  Speaker: their position.
• 4:38
  Speaker: Well, the Chinese are appealing to the public and they are cars.
• 4:42
  Speaker: You start to see them and, uh, not only specific market, but I
• 4:46
  Speaker: would say everywhere in Europe.
• 4:48
  Speaker: Uh, and the numbers and the
• 4:50
  Speaker: figures are confirmed that we
• 4:52
  Speaker: are seeing a big growth from the
• 4:55
  Speaker: Chinese runs in, and in many
• 4:57
  Speaker: cases at the expense, of course,
• 5:00
  Speaker: of the traditional brands,
• 5:01
  Speaker: because we have to remember that
• 5:03
  Speaker: Europe is is not a market, is a
• 5:06
  Speaker: mature market.
• 5:07
  Speaker: So it doesn't grow anymore.
• 5:09
  Speaker: And it has lost actually around two million units of sales per
• 5:15
  Speaker: year between the pre-pandemic twenty nineteen and today.
• 5:20
  Speaker: So the market is more or less two to two million units
• 5:23
  Speaker: smaller, but the competition is bigger and is getting tougher.
• 5:28
  Speaker: So it's it's nice to see the progress, but it's also, let's
• 5:33
  Speaker: say, a frightening for the world of cars as we know it because
• 5:40
  Speaker: it's not it's changing very fast and we don't know where we're
• 5:45
  Speaker: gonna what we're gonna see in the coming years.
• 5:48
  Speaker: And, um, you know, staying with
• 5:51
  Speaker: Europe, with the UK sitting
• 5:54
  Speaker: outside of the EU now, how much
• 5:57
  Speaker: more attractive is the UK market
• 6:00
  Speaker: for Chinese brands looking for
• 6:02
  Speaker: fast growth and coming into
• 6:04
  Speaker: Europe?
• 6:06
  Speaker: Look, it is it is a very, very attractive and I would say the
• 6:11
  Speaker: most attractive market for the Chinese car makers right now in
• 6:13
  Speaker: Europe because you know, it's not part of the EU.
• 6:19
  Speaker: So it doesn't it doesn't have to
• 6:22
  Speaker: follow the the trade rules
• 6:25
  Speaker: imposed by the European
• 6:26
  Speaker: Commission.
• 6:28
  Speaker: Uh, so making of the UK, let's
• 6:30
  Speaker: say, uh, a more open market to
• 6:32
  Speaker: imports.
• 6:33
  Speaker: And, uh, and actually you can see those, uh, that, that, that,
• 6:39
  Speaker: uh, position in the figures.
• 6:41
  Speaker: The UK is now the biggest market for um, Chinese car brands in
• 6:49
  Speaker: Europe ahead of Germany, and not only in terms of volume, but
• 6:54
  Speaker: also in terms of market share.
• 6:57
  Speaker: And this is the consequence of
• 7:00
  Speaker: less restrictions, a a consumer
• 7:04
  Speaker: base that is more open to new
• 7:06
  Speaker: brands.
• 7:07
  Speaker: The UK, unlike Germany and
• 7:10
  Speaker: France, had its car industry is
• 7:14
  Speaker: less.
• 7:15
  Speaker: Its local car industry is less and less and less powerful.
• 7:21
  Speaker: So it's easier for new entries to gain traction.
• 7:26
  Speaker: And this is exactly what is going on in the UK between.
• 7:30
  Speaker: During the first half of this
• 7:32
  Speaker: year, the Chinese car makers,
• 7:36
  Speaker: the Chinese car brands, which is
• 7:38
  Speaker: this is important to to to
• 7:40
  Speaker: clarify here because one thing
• 7:42
  Speaker: is Chinese car brand and a
• 7:43
  Speaker: different thing is a Chinese car
• 7:45
  Speaker: because there are many cars
• 7:48
  Speaker: produced by traditional car
• 7:49
  Speaker: makers in China and exported to
• 7:51
  Speaker: the world.
• 7:52
  Speaker: When I talk about the Chinese car brands, I exclude those.
• 7:55
  Speaker: So I'm excluding, for example,
• 7:57
  Speaker: the Tesla Model three coming
• 7:59
  Speaker: from China.
• 8:00
  Speaker: I don't include it as a Chinese brand.
• 8:02
  Speaker: So the numbers for the Chinese
• 8:06
  Speaker: car brands show that this that
• 8:08
  Speaker: they are.
• 8:09
  Speaker: They already have more than fifteen percent market share in
• 8:13
  Speaker: the UK, which is one of the highest in Europe.
• 8:16
  Speaker: I would say the highest, I would say is more than what you see in
• 8:20
  Speaker: Spain or Italy, where they have also gained a lot of traction.
• 8:22
  Speaker: So yes, the UK is is the most appealing market for them right
• 8:26
  Speaker: now in the in Europe.
• 8:28
  Speaker: And staying with that, do you
• 8:31
  Speaker: see the UK being used by the
• 8:34
  Speaker: Chinese brands as a blueprint
• 8:36
  Speaker: for how they launch into other
• 8:38
  Speaker: European markets?
• 8:41
  Speaker: Yes.
• 8:42
  Speaker: Um I think um As as I said before, the, the, the
• 8:51
  Speaker: attractiveness of the is is making or let's say is forcing
• 8:55
  Speaker: many Chinese car makers to, uh, try the UK first and then expand
• 9:02
  Speaker: to the rest of the continent.
• 9:03
  Speaker: Of course, we have always seen the opposite.
• 9:06
  Speaker: We usually see the new cars being introduced in, uh, in
• 9:11
  Speaker: Europe before the UK.
• 9:14
  Speaker: But with the Chinese this might be changing because um, it's,
• 9:19
  Speaker: it's easier for them.
• 9:21
  Speaker: Uh, it is, let's say, uh, it's still the second, um, car market
• 9:27
  Speaker: in Europe behind Germany.
• 9:29
  Speaker: So it's quite representative and I think it's going to gain even
• 9:34
  Speaker: more, um, Protagonism a in within the next, uh, years.
• 9:42
  Speaker: And I mean, on, on that, I mean, of all the new entrants, brands
• 9:47
  Speaker: that, you know, they've launched in recent years.
• 9:50
  Speaker: And, you know, we can talk about
• 9:51
  Speaker: one or two of those, but which
• 9:53
  Speaker: are the ones that stand out for
• 9:55
  Speaker: you as a as an industry watcher
• 9:57
  Speaker: and why?
• 9:58
  Speaker: I mean, because obviously, you
• 9:59
  Speaker: know, you've got the BYD's,
• 10:00
  Speaker: we've got the JC Armada cherry
• 10:03
  Speaker: now alongside that as the parent
• 10:04
  Speaker: company and lipase now alongside
• 10:06
  Speaker: that.
• 10:07
  Speaker: But you know, there's others
• 10:09
  Speaker: that are earmarked in the UK and
• 10:11
  Speaker: Europe.
• 10:12
  Speaker: What you know, for anybody
• 10:13
  Speaker: listening, what should the
• 10:15
  Speaker: industry be watching for and
• 10:18
  Speaker: why.
• 10:19
  Speaker: Mhm.
• 10:21
  Speaker: Well, there are many Chinese car makers.
• 10:25
  Speaker: And once we get in Europe are just a small part of them.
• 10:29
  Speaker: There are many others that have not even tried to to go abroad
• 10:33
  Speaker: because they are now concentrated in China.
• 10:36
  Speaker: But the long term goal of most
• 10:39
  Speaker: of them is, of course, to expand
• 10:41
  Speaker: their business.
• 10:42
  Speaker: So in Europe, as we said so far, the big game changers have been
• 10:47
  Speaker: BYD and Moda and LG.
• 10:52
  Speaker: We have to remember MG was the first one and consider MG as a
• 10:56
  Speaker: Chinese brand, even though it's of it has a British heritage.
• 11:00
  Speaker: Yeah, it's right now it's fully it's fully Chinese.
• 11:03
  Speaker: Right.
• 11:04
  Speaker: Uh, so in addition to these ones, I think, uh, the upcoming
• 11:10
  Speaker: wave of Chinese car car brands is going to include a Geely and
• 11:15
  Speaker: Geely is, is now, uh, well, based on Q1 results, it was the
• 11:24
  Speaker: largest Chinese car maker ahead of BYD for the first time.
• 11:29
  Speaker: And but it a lot to expand its
• 11:32
  Speaker: presence outside China because
• 11:35
  Speaker: it you know, it is the owner of
• 11:38
  Speaker: other already, uh, Western car
• 11:40
  Speaker: brands, right?
• 11:41
  Speaker: So Volvo for example.
• 11:43
  Speaker: So, um, they took their time,
• 11:46
  Speaker: but now they are accelerating
• 11:48
  Speaker: their plans.
• 11:49
  Speaker: So Geely I think is going to be
• 11:51
  Speaker: a, a, a new game changer in the
• 11:53
  Speaker: coming months.
• 11:54
  Speaker: It's already, uh, doing it's, it's expanding its presence.
• 12:00
  Speaker: And Chang'an Changan is also a big group from China.
• 12:04
  Speaker: If it's properly remember, I
• 12:06
  Speaker: think it's the third largest by
• 12:08
  Speaker: volume in China or the fourth
• 12:10
  Speaker: behind Chery.
• 12:12
  Speaker: They are very close.
• 12:13
  Speaker: But Chang'an has also taken its
• 12:17
  Speaker: time to explore the European
• 12:19
  Speaker: market.
• 12:20
  Speaker: They have very competitive products, the two of them and
• 12:25
  Speaker: one of their brands.
• 12:26
  Speaker: And uh, so they could eventually change everything.
• 12:29
  Speaker: If we go, uh, if we go farther down the, the, the ranking in
• 12:35
  Speaker: terms of volume from China, there are other car makers that
• 12:39
  Speaker: have not arrived yet.
• 12:40
  Speaker: I think they are going to also change the everything.
• 12:43
  Speaker: Xiaomi is the first one Xiaomi has made a lot of.
• 12:50
  Speaker: Uh. It has made a revolution, let's say in China.
• 12:53
  Speaker: It has become like the Tesla in China.
• 12:56
  Speaker: It's very popular there.
• 12:58
  Speaker: It's cars.
• 12:58
  Speaker: It's only two cars right now are very popular.
• 13:02
  Speaker: The Xiaomi S u seven and y u seven.
• 13:06
  Speaker: They just introduced a massive SUV for the Chinese market.
• 13:09
  Speaker: I don't see a big potential for that car outside outside China.
• 13:12
  Speaker: But regarding the first two, the s u seven and a y u seven, uh, I
• 13:19
  Speaker: think they can do a lot of things in China, in Europe, as
• 13:22
  Speaker: Tesla did ten years ago.
• 13:24
  Speaker: You have to remember also the UK was a good example of this.
• 13:27
  Speaker: The UK was one of the biggest markets for, for Tesla at the
• 13:32
  Speaker: beginning, uh, it was a market where it grew the fastest.
• 13:39
  Speaker: So I think it's going to be also the case for Xiaomi whenever
• 13:42
  Speaker: they decide to officially introduce brand A in Europe.
• 13:46
  Speaker: And the UK, of course is going to be a key market for them.
• 13:50
  Speaker: The other one that might have
• 13:54
  Speaker: also some potential is Li Auto,
• 13:56
  Speaker: Li Auto Li Qiang, which is so
• 13:59
  Speaker: far focused or specialized on a
• 14:03
  Speaker: big SUVs with a extended range
• 14:08
  Speaker: um engines.
• 14:09
  Speaker: They are SUVs are quite appealing, very modern, very,
• 14:15
  Speaker: uh, uh, interesting in terms of, of comfort and tech solutions.
• 14:21
  Speaker: And I think as a, as an SUV brand, it also has some
• 14:25
  Speaker: potential by China.
• 14:26
  Speaker: So let's see, but as I said, the Chinese car market is always
• 14:31
  Speaker: bringing news, not only good ones, because actually there are
• 14:35
  Speaker: some car makers from China that are also struggling.
• 14:37
  Speaker: So we will probably won't see them all in the outside China.
• 14:41
  Speaker: But it's it's let's say it's
• 14:45
  Speaker: changing the global market every
• 14:48
  Speaker: day.
• 14:49
  Speaker: Yeah.
• 14:49
  Speaker: So I think as you say there, I think, you know, you we think
• 14:53
  Speaker: about these brands and Geely being one of them.
• 14:56
  Speaker: And obviously the they're just
• 14:57
  Speaker: the parent behind obviously many
• 14:59
  Speaker: brands that, you know, taking
• 15:01
  Speaker: market share both in the UK and
• 15:04
  Speaker: Europe.
• 15:04
  Speaker: And, and obviously, you know,
• 15:06
  Speaker: the same with, with Chery and
• 15:08
  Speaker: their multi brands that they
• 15:09
  Speaker: operate above.
• 15:10
  Speaker: And as you say with Shanghai, I think people see Shanghai as a
• 15:13
  Speaker: fairly new entrant.
• 15:14
  Speaker: But as you say, it's a big business outside of the UK and
• 15:18
  Speaker: they've been operating in the UK as a research and development
• 15:21
  Speaker: for for many years.
• 15:22
  Speaker: So I think, you know, but is
• 15:24
  Speaker: this going to I mean, obviously,
• 15:25
  Speaker: you know, a lot of this is
• 15:26
  Speaker: taking market share from, let's
• 15:28
  Speaker: say, the more established
• 15:29
  Speaker: brands.
• 15:30
  Speaker: I don't like to call them legacy brands quite yet.
• 15:33
  Speaker: Um, but, you know, you've got
• 15:34
  Speaker: things like Great Wall Motors,
• 15:36
  Speaker: DWM.
• 15:37
  Speaker: They've seen a very slow burn here in the UK.
• 15:40
  Speaker: I mean, we're just one hundred and forty four cars sold in the
• 15:43
  Speaker: first half of twenty twenty six.
• 15:46
  Speaker: I mean, I seen similar in other
• 15:48
  Speaker: markets that some of these
• 15:49
  Speaker: brands are just not making the,
• 15:51
  Speaker: the traction.
• 15:53
  Speaker: Um, like some of the brands you just mentioned before.
• 15:57
  Speaker: Well, yeah.
• 15:59
  Speaker: Well, the case of Great Wall is interesting because they, they
• 16:04
  Speaker: were in Europe, in some European markets twenty years ago.
• 16:08
  Speaker: And they were exploring, they had some interesting good
• 16:12
  Speaker: presence in Bulgaria or.
• 16:14
  Speaker: Yeah.
• 16:15
  Speaker: In Eastern Europe.
• 16:17
  Speaker: A but then they, they changed everything.
• 16:21
  Speaker: They been trying to also to catch up in China, a great.
• 16:25
  Speaker: Wall Motors is a carmaker that sells around one point two one
• 16:30
  Speaker: point three million units per year, which means that it's not
• 16:33
  Speaker: part of the big ones from China, but it's not a small one either.
• 16:38
  Speaker: The thing is that it has focused
• 16:41
  Speaker: is its strategy in China on a
• 16:45
  Speaker: petrol engines or in the best of
• 16:48
  Speaker: the cases, hybrids leaving very,
• 16:51
  Speaker: very few space to the fully
• 16:53
  Speaker: electric vehicles.
• 16:53
  Speaker: And actually the only brand it has right now which produces
• 16:57
  Speaker: fully electric is aura, which has been also in the in Europe
• 17:01
  Speaker: for some some years and in the UK as well.
• 17:06
  Speaker: But it I mean, the car that we saw from Great Wall Motors,
• 17:11
  Speaker: particularly the Ora funky cat, I think it was the name.
• 17:15
  Speaker: Yeah, yeah, a fully electric.
• 17:17
  Speaker: But it arrived, I would say not in the right time and with a
• 17:22
  Speaker: quite expensive price.
• 17:24
  Speaker: Yeah.
• 17:25
  Speaker: With a high price E and the.
• 17:28
  Speaker: So it was not in my opinion, not
• 17:30
  Speaker: it wasn't the best way to open
• 17:33
  Speaker: or to create a market for your
• 17:36
  Speaker: cars.
• 17:37
  Speaker: So this didn't work, let's say like that.
• 17:40
  Speaker: It didn't.
• 17:40
  Speaker: It didn't.
• 17:41
  Speaker: It was yeah, a big a big flop.
• 17:44
  Speaker: Now the the company is trying to reposition itself in Europe, uh,
• 17:49
  Speaker: and learn from this takes, uh, with the introduction of the new
• 17:54
  Speaker: aura five, which is very similar to, let's say, to the funky cat,
• 17:58
  Speaker: but it's more of a crossover SUV bigger with the difference with,
• 18:04
  Speaker: um, uh, hybrid engines, plug in hybrid engines, or even, uh,
• 18:09
  Speaker: petrol, not only electric.
• 18:12
  Speaker: So this is, uh, allowing these brands to increase their
• 18:17
  Speaker: presence not only in the electric vehicles, because not
• 18:20
  Speaker: only depend on one powertrain to go on, especially when you, when
• 18:24
  Speaker: you're targeted by the European Commission, uh, with your
• 18:28
  Speaker: electric cars, right.
• 18:29
  Speaker: So they learn from these mistakes.
• 18:31
  Speaker: And I think that eventually they will, um, have a, a, a good,
• 18:37
  Speaker: let's say a respectable, uh, market share in the region.
• 18:41
  Speaker: So, so it sounds like then that we shouldn't underestimate some
• 18:47
  Speaker: of these new entrants ability to, you know, uh, reengineer
• 18:52
  Speaker: what they came in with.
• 18:53
  Speaker: I say gwm the funky cat came in
• 18:55
  Speaker: fairly early with a fully
• 18:57
  Speaker: electric, not the greatest
• 18:59
  Speaker: looking of vehicles could be
• 19:01
  Speaker: said, um, with like you say, I
• 19:04
  Speaker: mean the UK, I think it was
• 19:05
  Speaker: closer to forty thousand pounds
• 19:07
  Speaker: sterling.
• 19:08
  Speaker: So, you know, it came in quite
• 19:10
  Speaker: high ticket price at a market
• 19:11
  Speaker: that wasn't quite ready for it
• 19:12
  Speaker: yet.
• 19:12
  Speaker: But it sounds like what you're saying is that don't
• 19:15
  Speaker: underestimate these Chinese manufacturers that they are
• 19:17
  Speaker: prepared to, you know, engineer what they do to react and react
• 19:22
  Speaker: to the market and start again.
• 19:24
  Speaker: Um, which is, which is interesting that because I
• 19:27
  Speaker: think, you know, some people are trying to write off some of
• 19:29
  Speaker: these new entrants that they're not getting the traction, but it
• 19:32
  Speaker: doesn't sound like that.
• 19:33
  Speaker: That's what they'll do.
• 19:35
  Speaker: Yeah, I look, this one of the things that we've learned so far
• 19:39
  Speaker: from the Chinese makers is their the speed at which they, they
• 19:44
  Speaker: not only develop their, their product, but the way at which
• 19:47
  Speaker: they react to market changes.
• 19:51
  Speaker: Uh, there's one example in, in,
• 19:54
  Speaker: in October last year, the EU
• 19:57
  Speaker: Commission imposed the tariffs
• 19:59
  Speaker: on a tariff on, on, on electric
• 20:02
  Speaker: vehicles, uh, being imported
• 20:04
  Speaker: from China.
• 20:06
  Speaker: And everybody was saying, oh, okay.
• 20:08
  Speaker: So this is probably going to be a big impact on their sales.
• 20:11
  Speaker: Well, look what they did.
• 20:13
  Speaker: The first was okay, so we're
• 20:15
  Speaker: going to control their
• 20:16
  Speaker: powertrains.
• 20:17
  Speaker: And that's how they started to introduce the fully hybrids.
• 20:21
  Speaker: Energy is very good at them.
• 20:22
  Speaker: Plug in hybrids.
• 20:26
  Speaker: Are one example And some of them they are starting.
• 20:30
  Speaker: They are starting to explore the
• 20:33
  Speaker: extended range vehicles such as
• 20:34
  Speaker: Leap Motor.
• 20:35
  Speaker: So the Chinese car makers is not only about electric cars.
• 20:39
  Speaker: They.
• 20:40
  Speaker: They have plenty of powertrains
• 20:42
  Speaker: and with products wherever they
• 20:47
  Speaker: explore.
• 20:47
  Speaker: Of course, the Chinese are not
• 20:50
  Speaker: as competitive as the Westerns
• 20:52
  Speaker: when it's about combustion
• 20:54
  Speaker: engine cars.
• 20:55
  Speaker: But still, there are good
• 20:57
  Speaker: examples of of interesting, uh,
• 20:59
  Speaker: petrol or diesel cars from
• 21:00
  Speaker: China.
• 21:01
  Speaker: But, uh, the focus is on electrified vehicles, what they
• 21:05
  Speaker: call the new energy vehicles, which is not only electric cars.
• 21:09
  Speaker: So the case of, of, of Great
• 21:11
  Speaker: Wall or MG when it reacted to
• 21:14
  Speaker: the tariffs is quite
• 21:16
  Speaker: representative because they are
• 21:18
  Speaker: showing us that speed is a key
• 21:20
  Speaker: element here.
• 21:22
  Speaker: And it's something that unfortunately, uh, the neither
• 21:27
  Speaker: the European nor the Americans have, which is the speed.
• 21:31
  Speaker: They don't have that.
• 21:32
  Speaker: They.
• 21:32
  Speaker: They take their time.
• 21:34
  Speaker: And this is becoming a big problem for them.
• 21:39
  Speaker: Yeah.
• 21:39
  Speaker: No, I couldn't agree more.
• 21:40
  Speaker: I think the one that you say
• 21:42
  Speaker: they're very quick at reacting
• 21:44
  Speaker: and changing course and
• 21:46
  Speaker: redeveloping.
• 21:47
  Speaker: But we'll be back after this
• 21:49
  Speaker: short break with more from
• 21:50
  Speaker: Felipe.
• 21:51
  Speaker: You're listening to all the chatter that matters on the
• 21:55
  Speaker: Motor Trade Radio podcast powered by Cazoo.
• 22:00
  Speaker: Welcome back.
• 22:01
  Speaker: We're talking to leading industry analyst Felipe Munoz on
• 22:05
  Speaker: this special weekday episode.
• 22:07
  Speaker: Now, Felipe, there's been a number of recent reports.
• 22:11
  Speaker: We've covered these on the podcast about some Chinese
• 22:15
  Speaker: brands setting up production in Europe through joint ventures
• 22:20
  Speaker: with established carmakers looking like, at the moment, the
• 22:24
  Speaker: most likely scenario.
• 22:26
  Speaker: So yeah, we've reported on Geely.
• 22:29
  Speaker: With potentially Ford in
• 22:31
  Speaker: Valencia, Leap motor with
• 22:34
  Speaker: Stellantis, its joint venture
• 22:36
  Speaker: partner Chery with Nissan, and
• 22:40
  Speaker: or even Jaguar Land Rover in the
• 22:42
  Speaker: UK.
• 22:43
  Speaker: Which do you think are the most likely to happen and when?
• 22:48
  Speaker: Well, there are already happening things.
• 22:51
  Speaker: Uh, one one the best example is leap motor with with, uh,
• 22:56
  Speaker: Stellantis and Leap Motor.
• 22:58
  Speaker: They created this joint venture
• 23:00
  Speaker: for whatever sales outside
• 23:04
  Speaker: China.
• 23:05
  Speaker: So there is a fifty fifty there, a fifty one forty nine, I think
• 23:09
  Speaker: from the fifty one Stellantis, where basically Stellantis in
• 23:14
  Speaker: charge of all the sales and eventual production of Leap
• 23:19
  Speaker: motors outside China.
• 23:21
  Speaker: It is going to start anytime soon.
• 23:24
  Speaker: In Spain, some, uh, of, of, of one of its products.
• 23:29
  Speaker: I, I think it's the B10, which is a small SUV.
• 23:33
  Speaker: Uh, and it's somehow it's paying off because motors is taking off
• 23:39
  Speaker: in, in Europe, it's selling quite a lot in Italy and it's
• 23:44
  Speaker: gaining traction in other markets such as the UK as well.
• 23:47
  Speaker: That's one example.
• 23:48
  Speaker: But there are others that are already already taking place.
• 23:51
  Speaker: For example Chery with um, with Nissan.
• 23:55
  Speaker: Uh, I actually Chery I think
• 23:58
  Speaker: bought one of the plants Nissan
• 24:01
  Speaker: had in Spain and it's already
• 24:03
  Speaker: producing or assembling, let's
• 24:05
  Speaker: say some of its models under
• 24:08
  Speaker: traditional Spanish brands, Ebro
• 24:11
  Speaker: and Santana.
• 24:13
  Speaker: Uh, the upcoming announcements
• 24:15
  Speaker: are from Dongfeng and Stellantis
• 24:20
  Speaker: to use some of their plants in
• 24:22
  Speaker: front.
• 24:23
  Speaker: That's going to take place as well.
• 24:26
  Speaker: Because these plants need to be revamped.
• 24:32
  Speaker: They they need to use this.
• 24:33
  Speaker: They need to to make these plants productive.
• 24:36
  Speaker: Productive again.
• 24:38
  Speaker: Yeah.
• 24:38
  Speaker: A is not happening.
• 24:40
  Speaker: And it's becoming a national problem because the the
• 24:44
  Speaker: traditional car makers cannot or it's let's say it's very
• 24:48
  Speaker: difficult for them to, to fire people and close plants.
• 24:52
  Speaker: So basically at the moment, the only solution they have is to.
• 24:56
  Speaker: Let's bring some partners from China and, and, and open the
• 25:00
  Speaker: factories for them.
• 25:02
  Speaker: Uh, but as you said, there are more, more orders.
• 25:05
  Speaker: I've, I've heard about Chery as well in, in I don't know if it's
• 25:09
  Speaker: okay or somewhere in Europe.
• 25:11
  Speaker: Uh, so far the only exception has been, uh, Volkswagen.
• 25:17
  Speaker: It seems that they are happy
• 25:19
  Speaker: with the collaboration they have
• 25:21
  Speaker: right now in China, but they
• 25:23
  Speaker: don't intend, at least for now,
• 25:26
  Speaker: to use their factories for their
• 25:28
  Speaker: Chinese partners.
• 25:29
  Speaker: Let's see.
• 25:29
  Speaker: But this is changing all the time.
• 25:31
  Speaker: And the pressure, the time, the market conditions are getting
• 25:34
  Speaker: worse for them.
• 25:35
  Speaker: So eventually I think all of
• 25:37
  Speaker: them are going to make use of
• 25:38
  Speaker: this solution.
• 25:39
  Speaker: I mean, I mean, as you say, I
• 25:41
  Speaker: think, you know, some of the
• 25:43
  Speaker: some of the most established
• 25:44
  Speaker: manufacturers brands are also
• 25:46
  Speaker: struggling with production
• 25:48
  Speaker: utilization.
• 25:50
  Speaker: Chinese manufacturers, they're quite asset light, aren't they?
• 25:53
  Speaker: They don't like to just build a factory.
• 25:56
  Speaker: If they can obviously go in as a JV or take over an existing.
• 26:01
  Speaker: Because they say it's a. It's
• 26:02
  Speaker: quite expensive to shut down a
• 26:04
  Speaker: factory.
• 26:04
  Speaker: So I think it's more I think I
• 26:05
  Speaker: believe is it more expensive,
• 26:07
  Speaker: more costly to shut a factory
• 26:08
  Speaker: than it is actually to, to build
• 26:10
  Speaker: one in some cases for the
• 26:12
  Speaker: established brands.
• 26:13
  Speaker: So as you say, there's a lot, a lot going on there.
• 26:15
  Speaker: Indeed.
• 26:16
  Speaker: The thing is, at the same time, well, what they are doing is
• 26:19
  Speaker: open their their markets to come to the competition.
• 26:25
  Speaker: So it is, let's say a a solution in the short term.
• 26:29
  Speaker: Yes, they get rid of these
• 26:31
  Speaker: headaches of these plants in the
• 26:35
  Speaker: long term.
• 26:36
  Speaker: Well, they are just bringing more competition to their own
• 26:40
  Speaker: markets and locally producing in their own markets.
• 26:44
  Speaker: And so I'm not sure how how good this is going to be for them.
• 26:48
  Speaker: It's good for the entire
• 26:50
  Speaker: economy, of course, because
• 26:52
  Speaker: those car makers coming from
• 26:53
  Speaker: China are going to employ people
• 26:55
  Speaker: and they're going to keep these
• 26:56
  Speaker: factories busy.
• 26:58
  Speaker: Uh, but in the long term, this the traditional ones are going
• 27:02
  Speaker: to keep losing market share.
• 27:03
  Speaker: Yeah.
• 27:04
  Speaker: And probably final question.
• 27:06
  Speaker: We'll get your crystal ball out here.
• 27:08
  Speaker: Um, Philippe, I mean, what's your forecast on how the new car
• 27:13
  Speaker: market in in Europe will look by the, the end of the decade.
• 27:18
  Speaker: And probably as a follow up with
• 27:20
  Speaker: that is, you know, how much
• 27:21
  Speaker: growth is achievable by the
• 27:23
  Speaker: Chinese brands and how
• 27:25
  Speaker: successful will the established
• 27:27
  Speaker: brands be in, you know,
• 27:29
  Speaker: protecting market share,
• 27:32
  Speaker: especially against those those
• 27:33
  Speaker: European manufacturers?
• 27:37
  Speaker: That's the big question, I
• 27:39
  Speaker: think, is what we're going to
• 27:42
  Speaker: see is, is further expansion of
• 27:45
  Speaker: the Chinese.
• 27:46
  Speaker: Right now we we are seeing even with the with the, the, the, the
• 27:53
  Speaker: barriers to trade, the regulation and everything.
• 27:56
  Speaker: They already have around nine percent of the market by H1
• 28:01
  Speaker: twenty twenty six.
• 28:02
  Speaker: And as I said, not all of these brands are already in Europe.
• 28:06
  Speaker: So it's just let's say it's the start of of this story.
• 28:12
  Speaker: And once they start producing
• 28:14
  Speaker: locally or assembling locally,
• 28:16
  Speaker: you should even further market
• 28:20
  Speaker: share.
• 28:21
  Speaker: Bigger market share.
• 28:22
  Speaker: So I think this decade we will see a more, um, how do you say
• 28:29
  Speaker: divided or um market in terms of, of players.
• 28:34
  Speaker: We won't see this.
• 28:36
  Speaker: The usual ones leading with a lot of, uh, gap, uh, between
• 28:42
  Speaker: them and the, and the other, other, other guys.
• 28:44
  Speaker: I mean, I'm talking, I mean, we,
• 28:47
  Speaker: we should expect not to see
• 28:49
  Speaker: Volkswagen and Stellantis and
• 28:51
  Speaker: Renault just being the, the,
• 28:53
  Speaker: the, the usual leaders in all
• 28:55
  Speaker: segments.
• 28:56
  Speaker: But we will see a, a further optimization of the market
• 29:01
  Speaker: because of the Chinese.
• 29:02
  Speaker: It is already happening in other markets.
• 29:06
  Speaker: As I said, Europe is is is one of of the markets.
• 29:10
  Speaker: This is not where they have the largest presence.
• 29:13
  Speaker: If you go to Latin America.
• 29:15
  Speaker: They already have double digit
• 29:16
  Speaker: market share and they are having
• 29:18
  Speaker: a big impact on on markets and
• 29:21
  Speaker: the car makers that have been
• 29:22
  Speaker: operating them there for many
• 29:24
  Speaker: years.
• 29:24
  Speaker: Southeast Asia the same.
• 29:26
  Speaker: So I think Europe is going to
• 29:28
  Speaker: head to towards the same
• 29:29
  Speaker: direction.
• 29:29
  Speaker: Of course, it will all depend on
• 29:31
  Speaker: regulation, trade wars and all
• 29:34
  Speaker: of that.
• 29:35
  Speaker: But if these guys, if the Chinese decide to to locally
• 29:39
  Speaker: produce in Europe, well, it's going to be hard for them to
• 29:42
  Speaker: kick them out.
• 29:43
  Speaker: And so I think what we will see by twenty twenty, twenty twenty
• 29:48
  Speaker: is a more atomized you say like that market in Europe.
• 29:52
  Speaker: Yeah.
• 29:52
  Speaker: Yeah.
• 29:53
  Speaker: I think it is going to be very I
• 29:54
  Speaker: say, I think for the for the
• 29:57
  Speaker: scene, for the for the market to
• 29:58
  Speaker: understand what is on the
• 29:59
  Speaker: horizon.
• 29:59
  Speaker: Like you say, look at Latin
• 30:00
  Speaker: America, South America, Asia
• 30:03
  Speaker: that see the penetration, the
• 30:05
  Speaker: volume that they're getting in
• 30:06
  Speaker: there.
• 30:06
  Speaker: And as you say, as they start to, to get into these joint
• 30:09
  Speaker: ventures and co-production that bypasses that some of the
• 30:13
  Speaker: challenges of tariffs, import, etc., that there and as you say,
• 30:19
  Speaker: becomes a little bit more very difficult to to get them out
• 30:22
  Speaker: once they're once they've embedded in and, you know,
• 30:26
  Speaker: they're part of the employment within their markets, which will
• 30:29
  Speaker: be be interesting.
• 30:31
  Speaker: As always, we will chat about
• 30:32
  Speaker: this kind of thing for hours and
• 30:34
  Speaker: hours.
• 30:34
  Speaker: And you and I, this one.
• 30:37
  Speaker: So I think, you know, for me, Curtis and I say at the start,
• 30:40
  Speaker: it's great to have you back on.
• 30:42
  Speaker: I think we should do it more often.
• 30:43
  Speaker: I think it would be great to get your view on what's happening
• 30:46
  Speaker: outside of the UK and at that higher level, more strategic.
• 30:50
  Speaker: For me, I think one thing to for listeners that, as you say, you
• 30:54
  Speaker: know, very prolific in terms of social media, those that don't
• 30:58
  Speaker: follow you on LinkedIn, um, they are missing out.
• 31:00
  Speaker: Curtis and I, um, do, do, and I know a lot of people that do
• 31:04
  Speaker: follow what you, you put out into the market.
• 31:07
  Speaker: The other thing I would say is
• 31:08
  Speaker: that to anybody listening to
• 31:10
  Speaker: this podcast today, Philippe
• 31:12
  Speaker: does a great newsletter that
• 31:17
  Speaker: does circulate to those wanting
• 31:19
  Speaker: to be on the distribution list
• 31:21
  Speaker: outside of what elite puts on on
• 31:24
  Speaker: LinkedIn.
• 31:25
  Speaker: Um, one has arrived this week, so it's the shift ahead for
• 31:28
  Speaker: August twenty twenty six.
• 31:29
  Speaker: And you know, he's looking at, you know, the Stellantis bet on
• 31:32
  Speaker: on Leap Motors Bev sales in sixty six markets.
• 31:36
  Speaker: The pick up marginal sales in Europe and and other things.
• 31:41
  Speaker: And always a fascinating read.
• 31:42
  Speaker: So on that Philippe if somebody wants to be added to that, can
• 31:46
  Speaker: they just try and reach out to you through LinkedIn?
• 31:49
  Speaker: Well, yes, there are there are many ways.
• 31:51
  Speaker: Yeah.
• 31:52
  Speaker: Um, one, the easiest when the easiest one is through my email,
• 31:56
  Speaker: Philippe double p dot munoz at outlook dot com or to follow me
• 32:04
  Speaker: on my social media platforms, car industry analysis.
• 32:07
  Speaker: Uh, and I always try to, to respond to the messages and of
• 32:11
  Speaker: course, share the content with whoever whoever is interested.
• 32:15
  Speaker: Yeah, yeah.
• 32:16
  Speaker: And as Curtis said at the start,
• 32:17
  Speaker: we'll add contact details, etc.
• 32:20
  Speaker: to the yeah notes as well to
• 32:22
  Speaker: everybody listening to this
• 32:23
  Speaker: podcast.
• 32:24
  Speaker: Thank you, thank you.
• 32:26
  Speaker: Well, Philip, many thanks for joining us.
• 32:29
  Speaker: Unfortunately, that is all we've got time for now.
• 32:32
  Speaker: So we hope you've enjoyed this weekday special.
• 32:35
  Speaker: Many thanks again to Philip for joining us for today's pod.
• 32:39
  Speaker: And Philip, the door is open.
• 32:41
  Speaker: You're welcome back any time.
• 32:43
  Speaker: But we're back with the headlines on Saturday.
• 32:46
  Speaker: Until then, it's goodbye from me and it's goodbye from him.
• 32:52
  Speaker: Thank you for listening to the Motor Trade Radio podcast
• 32:56
  Speaker: powered by Cazoo.