Western brands plot fightback against Chinese at Shanghai show

Global companies are plotting a fightback in China against the rise of Chinese brands, with next week’s Shanghai motor show offering them the perfect stage to show off their recovery. New models from the likes of Audi, Lexus, Mazda, Mercedes, Nissan and Volkswagen will take to the stands in a bid to convince showgoers that they're still relevant in this electrified, tech-led age. Volkswagen Group CEO Oliver Blume called the German company’s Shanghai new-model extravaganza a "milestone" in its reinvention to counter local brands. “Our products are tailored to the needs of Chinese customers, with a clear design language and cutting-edge technologies,” he said in a statement. Attracting the biggest crowd of all the global car makers' displays will likely be that combining both Audi (four rings) and its alter ego AUDI (four letters). The latter will be showing off the highly anticipated E5 Sportback, the first of its new youth-oriented, China-specific models with a tech-led spin, including an advanced semi-autonomous mode. Meanwhile on the Volkswagen stands will be three concept cars, two of which are electric SUVs and the other the brand’s first ever range-extender model, entering a hot new category for EVs with an on-board petrol generator. By 2030, Volkswagen Group is targeting 15% of the Chinese market with models it promises will be more than 80% electric or plug-in hybrid. Five years ago, that statement would have been insane, given that in 2020 the Volkswagen Group had a 19% share of the market. But the rapid evolution of local brands operated by the likes of BYD, Chery, Geely and Li Auto have slashed away that leadership to the point that in the first quarter this year, the market share of all German brands combined – including Mercedes and BMW – stood at just 17%, according to data from the China Passenger Car Association (CPCA). Meanwhile, over the same time frame, sales of Chinese brands surged to 63% of the market, up from 41% in 2021. The punishment dealt to the likes of the Japanese (a 12% share in the first quarter, down from 23% in 2021) and the Americans (a 5.7% share, down from 10%) has damaged them financially. For example, General Motors booked a $4.1 billion (£3.1bn) write-down on its Chinese operations for its 2024 accounts, with one of its joint-venture plants reported slated for closure. Nissan meanwhile cut 500,000 units of capacity from its manufacturing operations in China after last year closing the Changzhou plant it ran with Dongfeng. But China is too big to cut and run from. Stellantis chairman John Elkann told shareholders at the firm's AGM on 15 April that he believed the car market in China this year would be greater than the American and European markets combined. The joint venture between Dongfeng and Peugeot/Citroën might be on its last legs and Maserati’s China sales may have been down 73% last year, but Stellantis has stayed engaged with China via its innovative link-up with Leapmotor. With the US throwing up tariff barriers to car makers not building there and the European market shrinking, China has taken on a renewed importance. “Even though the market conditions have shifted significantly, even though China is a different place now than it was maybe three or four years ago, I would say that we're staying the course,” Mercedes’ CEO Ola Källenius said on his company’s annual earnings call on 20 February. China was still Mercedes’ biggest market last year, taking 34% of its global total despite a sales drop. The 683,568 cars it shifted there last year was double its US tally. Likewise, BMW continues to heavily rely on China, with the market still accounting for 29% of its sales in 2024, at 715,000. The US meanwhile accounted for 16%. “The China market is very big. You're talking about 25 million units per year. And even if it's a 20%, 25% share for European manufacturers, you're still talking about a huge marketplace,” BMW sales head Jochen Goller said on the firm's annual earnings call on 14 March. BMW saw its China sales fall 17% in the first three months of the year amid a wider premium slowdown, but the company is planning to launch 10 new models this year and another 20 in the following two years. Many are tailored to the Chinese market, for example the new long-wheelbase X3 SUV that will take a bow at Shanghai. Like many other global companies, BMW is scrabbling to overcome its perceived technology shortfall compared with more nimble Chinese players. It has just launched the new 5 Series with local firm Joynext’s V2X communications tech linking it to connected street furniture like traffic lights and other cars, paving the way for safer autonomy. While some like Ford, GM and Nissan are closing plants to reduce excess capacity, Toyota has secured land in Shanghai to build a wholly owned EV plant there – only the second foreign firm after Tesla to do so without the assistance of a Chinese partner. At Shanghai, Toyota's premium brand, Lexus, will unveil the latest version of its big-selling ES saloon, which it says “refines advanced electrification”. Not all foreign companies are on board with the Shanghai 2025 display of optimism. Missing from the exhibitor map are Citroën, Chevrolet, Genesis, Hyundai, JLR, Kia and Peugeot. This looks gloomy, given the accepted wisdom at the big Chinese shows is to turn up or risk customers thinking you’ve lost your appetite for the fight and are heading for the exit. That might still be true for some, like Peugeot and Citroën, but more likely is that the smaller foreign brands, already suffering financially from the never-ending price war in the country, are heeding their global account departments and pulling their motor show budgets, as they’ve done in the US and Europe. It also avoids the awkward sight of crowds surging past your stand of older ICE models to reach the hottest new Chinese EV. That threat will be reduced somewhat this year after the news that tech brand Xiaomi won’t be showing off its new electric SUV, but plenty more local brands will gathering their armies of influencers to ensure they gain that crucial show buzz. “Don’t worry, the Chinese will pack it out,” one Chinese car executive told Autocar. With their new local partnerships and fresh launches, the global players (excluding the luxury brands) will become indistinguishable from the locals at shows like Shanghai. It’s becoming the only way to survive.

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Western brands plot fightback against Chinese at Shanghai show

Audi, Lexus, Mazda, Mercedes, Nissan and Volkswagen aim to convince Chinese buyers they're still relevant

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Western brands plot fightback against Chinese at Shanghai show

Audi, Lexus, Mazda, Mercedes, Nissan and Volkswagen aim to convince Chinese buyers they're still relevant

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