Many car component suppliers have announced their financial results in the first half of 2023. While some were optimistic about the future of China's automotive sector, others said the market is chaotic and the demand is hard to measure.
On August 14, Tesla said it will cut the prices of Model Y Long Range and Model Y Performance by CNY14,000 (US$1,930). Moreover, although most companies held a positive outlook for the second half and the whole year of 2023, they did not see significant profit growth in the second quarter.
Taiwan-headquartered Hiroca Automotive Trim Corporation said the market of internal combustion engine vehicles in China faced fierce competition from the EV market, which experienced a price war, this year. Its automotive joint venture customers have grown cautious about their operation. Almost every company is trying to scale up its EV business and will have more plans for new products in 2024.
Suppliers who support Chinese EV makers said the market disarray has been going on for years. Plenty of new companies were founded before COVID-19 hit the world. Some of them were unreliable and just aimed at the government's incentives. The situation has made suppliers conservative about China's car market.
Some companies have reduced the workforce at their branch offices in China. It showed the increasing uncertainties businesses face in the market while most of the jobs cut were sales-related.
Most companies said the outlook for China's automotive sector will be more evident in the fourth quarter of 2023.
China-made EVs are rising in the Southeast Asian market. According to Counterpoint, the region saw battery EV sales in the first quarter of 2023 grow 10-fold from 2022. About 75% of the vehicles came from China, with BYD topping the list.
China dethroned Japan in global automotive exports in the first quarter of 2023. According to the China Association of Automobile Manufacturers, the country exported 636,000 EVs from January to July this year, a 147.8% increase from 2022.
The Chinese EV market has entered the elimination process. Consulting firm AlixPartners estimated that only 25 to 30 of the over 160 EV brands in the country will survive in 2030.
Sources said it takes three to five years from designing a car component to enter mass production. No one would want their efforts to go in vain. Therefore, it is unsurprising that some companies are now cautious about their investment in China.
