The vast sea allows for boundless leaps, how far can the automotive industry expand into the ocean?

Understanding the global automotive competitive landscape is of great significance for researching the potential of independent domestic car companies to go global. We believe that the core focus of overseas research should be on the accessible market size, local competitive landscape, product sales characteristics, as well as the dependence on the automotive industry and related policies. This report details the current status and planning of independent domestic car companies' exports, the size of the passenger car markets in various regions globally, the competitive landscape, and policy influences.

Current status of Chinese brand passenger car exports: Fuel vehicles dominate, with total volume in a continuous upward trend. The overseas registration volume of Chinese brand passenger cars has seen rapid growth since 2021, with fuel vehicles as the mainstay and an accelerated growth in new energy vehicles. The improvement in product strength of car companies and the advantage of the automotive industry supply chain are driving exports. In 2023, the overseas registration volume of Chinese brand passenger cars reached 1.806 million units, a year-on-year increase of 69.6%, with a market share of 3.5%, up by 1.2 percentage points year-on-year. Chinese brand passenger car exports are mainly concentrated in Eastern Europe, Western Europe, Central and Western Asia, and Southeast Asia, with overseas registration volume shares in 2023 at 26.1%, 14.1%, 15.5%, and 19.2% respectively. Chinese brand exports still mainly consist of fuel vehicles, with the overseas registration volume of Chinese brand fuel vehicles in 2023 at 1.468 million units, a year-on-year increase of 59.4%, accounting for 81.3%. Independent domestic car companies have different advantages in going global, mainly by simultaneously establishing factories and R&D bases to explore overseas markets.

Overseas passenger car market landscape: Slight fluctuations in total volume, with an increase in the proportion of new energy vehicles. The overall development of overseas markets is in a mature stage, with the total volume fluctuating around 55 million units. In 2023, the total overseas registration volume reached 52.379 million units, an increase of 11.6% year-on-year. The long-term trend for the development of new energy vehicles overseas is positive, with the overseas registration volume of new energy vehicles in 2023 at 4.988 million units, a year-on-year increase of 29.2%, and a penetration rate of 9.5%. In terms of the overall market, the three main markets of North America, Southeast Asia, and Western Europe have strong automotive demand, with stable shares of overseas registration volume in 2023 at 18.143 million, 13.061 million, and 10.956 million units, accounting for 34.7%, 24.9%, and 20.9% respectively. The global automotive landscape is stable, with a CR3 brand concentration ratio of 24.8% in 2023, including Toyota, Hyundai, and Ford, a decrease of 0.8 percentage points year-on-year.

Long-term space for Chinese car companies to go global: Globalization layout gradually advancing, with a focus on Eastern Europe, Central and Western Asia, South America, Southeast Asia, and Western Europe markets. Chinese brand new energy exports are accelerating, and it is expected that the long-term space for overseas registration of Chinese brand passenger cars will reach 10.02 million units, with a market share of 18.1%.

Chinese brand fuel vehicles focus on Eastern Europe & Central and Western Asia markets. The Eastern Europe and Central and Western Asia markets are rich in oil resources, with slow development in the electric vehicle market, hence the great potential for fuel vehicle exports. It is estimated that the long-term space for overseas registration of Chinese brand passenger cars in Eastern Europe and Central and Western Asia markets will reach 1.6 million units and 1.44 million units respectively, with a market share of 50.0% and 60.0%.

Chinese brand new energy vehicles open up Southeast Asia & South America markets. Southeast Asia and South America are in a golden period of power transformation, with strong government support for new energy. Southeast Asia focuses on countries like Thailand, while South America focuses on Brazil, presenting promising prospects for exports of independent new energy car companies It is expected that the overseas registration volume of Chinese brands in the Southeast Asia (excluding Japan and South Korea) / South America market will have a future space of 2.8 million units / 1.32 million units, with a market share of up to 40.0% / 40.0%.

Local factories will further increase the market share of Chinese brands in the new energy vehicle segment in Western Europe & Northern Europe. The development of new energy vehicles in Europe started early, and Chinese brand passenger cars have opened up the market with high cost performance and technological advantages. Despite the EU's imposition of anti-subsidy tariffs, with the progress of Chinese automakers' local factory construction plans, the overseas registration volume is expected to further increase. It is estimated that the future space for overseas registration of Chinese brands in Western Europe / Northern Europe market is 1.2 million units / 240,000 units, with a market share of up to 10.0% / 30.0%.

Investment advice: Going global is an inevitable path for independent automakers. Models that have been verified through intense competition in the domestic market have obvious advantages over joint venture vehicles in terms of product strength, cost performance, etc. Referring to the development path of Japanese brands, favorable timing and conditions are indispensable. Independent automakers can leverage the wave of electrification and intelligence to move from China to the world, from exporting complete vehicles to establishing overseas factories, truly achieving independent growth. Recommended overseas active layout companies are BYD, GWMOTOR, CHANGAN AUTOMOBILE, GEELY AUTO, and it is recommended to pay attention to LEAPMOTOR.

Risk warning: Intensified competition in the automotive industry, slower-than-expected progress in going global, and lower-than-expected global penetration rate of smart vehicles.

Source: Minsheng Securities