~10 Mio
Expected annual BEV unit sales
~863 bn USD
Additional annual spending on financial services
~121 bn USD
Additional annual spending on mobility services
~1 Mio
Number of autonomous vehicles (L4) in the roads
~25%
Chinese market share of global vehicle sales
The total size of automotive value pools in China is expected to double by 2030, reaching a market size of more than USD 4.5 trillion. Trends such as digitization and electromobility are not only generating increase in revenue but have also led to new and growing value pools.
Well-resourced Chinese start-ups are capturing the Chinese automotive market, chasing new value pools and challenging the way things are done. Global ICE incumbents come under increasing economic pressure. OEMs, suppliers and investors with ambitions in this dynamic and highly competitive environment urgently need to decide on their own approach to the Chinese market. They have three options – going it alone, strategically partner or invest.
This study identifies current trends in the Chinese automotive market, takes a closer look on potential value pools and provides implications for automotive players in order to achieve a successful positioning in the Chinese market.
There is a broad spectrum of value pools to tap into – traditional value pools remain large while new value pools are growing. Automotive players should focus on a two-folded strategy, securing their market share in traditional while developing new shares in emerging value pools.
These value pools remain a major source of potential in the Chinese automotive industry. They include production and sales value pool as well as components, aftermarket sales and services. In production and sales the principal revenue will shift from ICE to NEV models. The value pool aftermarket sales and services will decrease as these vehicles require significantly less maintenance. The one of components has increased but is supposed to fall again since car parcs are growing and also the share of NEVs increases.
The four emerging value pools - financial services, usage and operation, mobility services as well as refurbishing and recycling – are supposed to grow by USD 1 trillion by 2030. The largest and most profitable of these growing value pools will be financial services which comprise three segments: financing, leasing and insurance.
The three other value pools are benefitted by the emerging of NEV energy supply, the rising of rental and sharing services as well as battery reuse or resell, and battery recycling.
Global players have to decide whether tackling a new value pool alone, forming partnerships with better positioned companies, or investing in high-potential third-party companies. As shown below those players should assess the potential of the new value pools, and then evaluate the extent to which each one falls within range of their own core competencies. For those value pools that lie well outside their normal comfort zone, players should look to make the most efficient use of their resources by investigating potential partnerships and investments.
The study illustrates that whole new areas of opportunity are opening up in the Chinese automotive industry and global players urgently need to react if they want to capitalize and achieve a successful future positioning in China.
Dr. Nils Altfeld, Tim Joussen, Alexandra Ausma, Kai Schwade, Kaysie Li, Lin Q Li and Andrea Li also contributed to this report.
