Automotive

Germany’s Automakers Being Outpaced By China in 2023

Automakers in Germany Being Outpaced by China

As order books thin and consumer spending power dwindles amid growing inflation, a sense of crisis is creeping throughout the German economy. Germany’s automakers are also facing headwinds, by mounting structural issues in the once-dominant auto industry in China.

The shift to electric mobility and self-driving vehicles is raising prices, while the necessary revenues, which are currently mostly derived from sales of combustion engine vehicles, are becoming increasingly unpredictable, not to mention politically unpalatable.

Volkswagen, Mercedes-Benz, and BMW all reported positive company results for the first half of 2023. They all reported improved revenues and profits.

However, their outlooks for the balance of the year have disappointed investors and shareholders. Inflation and rising borrowing rates are reducing consumer desire for new autos.

“Even if we see an increase in production, this is not a sign of easing,” Hildegard Müller, president of the German Association of the Automotive Industry, warned, noting that sales in 2019 were still more than a fifth below than pre-pandemic levels.

Orders are plummeting in Germany, particularly for battery-powered vehicles, with demand falling to only about 60% of last year’s levels.

Meanwhile, China, the world’s largest and most important automotive market, is rapidly expanding its electric car sector, extending its lead not just in new registrations but also in production. China currently drives every second electric vehicle on the planet.

Chinese car manufacturers are also making rapid technological advancements, catching up quickly to market leader Tesla. Chinese automobile purchasers, both from the middle and upper classes, are increasingly favouring homegrown brands.

According to the China Passenger Car Association, China’s largest carmaker BYD sold 29% more purely electric vehicles than Tesla in the first half of this year.

“A disruption is taking place in this market,” Ralf Brandstätter, a board member of VW China, recently told reporters, after admitting that VW was outsold by BYD in China in the first quarter. BYD sold nearly twenty times as many electric vehicles in China as VW.

VW has established a partnership with carmaker Xpeng in the sectors of electromobility, software, and autonomous driving in order to ride the wave of China’s emerging automotive strength. The partnership with the Chinese firm costs VW $700 million and seeks to introduce two electric VW cars to the Chinese market by 2026.

Volkswagen’s high-end brands Porsche and Audi, as well as Mercedes-Benz and BMW, are under increasing market pressure.

Berylls, a consultancy business in the automotive industry, claimed in a recent market study

that there is a “change of guard in China” in the premium market. In battle with traditional German luxury firms, the Chinese are “overtaking on the fast lane,” according to DW.

For decades, German automakers dominated the Chinese market by employing a trickle-down strategy: they provided technology they had developed as optional extras for consumers and continued to sell it at a premium price until their competitors caught up.

“How out of step this product strategy is with the expectations of present-day Chinese car buyers, German OEMs [original equipment manufacturers] are currently getting a first taste of – with alarming implications for the future,” stated Willy Wang, managing director of Berylls China.

“As China has moved to the forefront of consumer innovation, Chinese customers have neither the patience to wait for technologies to trickle down the line nor the willingness to pay extra for the latest features,” Wang wrote.

Previously, German luxury vehicles were regarded excellent status symbols for China’s emerging middle and upper classes. Domestic brands were thought to be technologically behind and of poor quality.

However, Chinese-made vehicles are becoming more popular, owing to digital features such as enhanced assistance and entertainment systems. Given the traffic condition on China’s congested roadways, this is hardly surprising. According to the study, customers view them to be almost the same or even slightly better than major carmakers in terms of comfort and quality.

“The German auto industry will likely not play the same dominant role in China’s car sector as it did in the past 20 years,” says Gregor Sebastian, a Merics Institute China expert. According to him, technology is replacing traditional qualities as a motivation for Chinese customers to make a purchase.

It’s no surprise that Chinese manufacturers now produce 80% of all battery-electric vehicles in China. Only Tesla is in the top ten sellers. German brands are no longer represented on the list.

In terms of the whole Chinese car market, including vehicles with internal combustion engines, Chinese brands are on track to outsell international brands for the first time this year, with a market share of 51%. According to management consultants AlixPartners’ Global Automotive Outlook report for 2023, this share will climb to 65% by 2030.

In Europe, the research estimates that car sales would stay 15% lower than pre-pandemic levels. This was most certainly a long-term prospect. Chinese electric vehicle producers would gradually put pressure on European automakers in their domestic markets.

Unsurprisingly, China will overtake Japan as the world’s automobile export champion in the first quarter of 2023. It was still in sixth place in 2020. The Asian country is growing as a sales market, exporter, and manufacturing site.

“China is on its way to becoming an automotive superpower,” AlixPartners’ automotive specialist Fabian Piontek told DW. European industries are increasingly having to defend their market share at home. “The era of record profits for German automakers is coming to an end,” he said.

This article was originally written in German by Deutsche Welle.

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Automotive

Russell’s early departure leaves Lando Norris on pole at the Hungarian F1 GP.

(CTN News) – Lando Norris and his McLaren squad survived a tough qualifying session for the Hungarian Grand Prix, but they know they must perform on Sunday.

Lando Norris needed to win Budapest after Oscar Piastri locked off the top row in the field’s fastest McLaren. Recent races have been costly owing to wasted opportunities and little mistakes.

He matched Max Verstappen’s pole lap at the Hungaroring, who was unhappy to finish third. In a confident and aggressive approach, the 24-year-old finished more than three tenths ahead of the Dutchman, hitting the apexes.

Piastri followed Lando Norris by two hundredths of a second on the second hot run, demonstrating McLaren’s speed.

McLaren is doing well since Lando Norris won the Miami Grand Prix.

His potential triumphs have been cost by team and driver error, for which both parties have taken responsibility. On Sunday, he and McLaren will know they must do well.

Norris was quietly pleased with his historic first pole in Hungary and third overall. Although confident, McLaren will also be proud of their recent race progress. No one has won the pole in Budapest since Lewis Hamilton won the race and flag in 2012.

Norris and his crew recognize they must capitalize on closing gaps with 12 races left to drive Verstappen to the finish. Lando Norris understands. Behind Verstappen by 84 championship points.

“I know we missed out on some races, but we did the best we could in every one of them, and I don’t want to get back into all that stuff,” he said. I expect Oscar and Max to challenge me in the rear, not a clean weekend.

“Every location and point must be maximized; the more we can do to return to Max and Red Bull, the better.”

Hungary is a great opportunity since Lando Norris Verstappen was plainly unhappy with his car and outperformed. This disappointed him twice because the team had swiftly upgraded this race.

Verstappen had stated that the upgrades will define the second half of the season, but he admitted that he did not think they had gone far enough and could not defeat the McLarens.

“The changes are effective, but we still need more as we are not at the top,” said he. “Despite the imbalance, I liked the laps. I was pushing hard, so you had these little moments. Fast lap times are less crucial today. Simple: we need to work more because we’re moving slower. McLaren’s qualifying performance suggests a lot of ground to cover.

Lando Norris completed his best lap despite two crash-related stoppages.

Verstappen looked great in dry Q3 hot laps. He set a record with a lap time of 1 minute, 15.555 seconds and was quickest through each sector.

Lando Norris followed and pushed through the corners with fearlessness, posting a perfect 1:15.227 lap time. Piastri improved to second place on the penultimate laps while Verstappen did not, and Yuki Tsunoda’s crash halted the session.

A tardy coda didn’t matter when practice resumed because the last two minutes on old tires were worthless. McLaren has all the cards, but they must perform at the highest level to prove the legendary brand can win again.

Carlos Sainz of Ferrari was fourth and Lewis Hamilton of Mercedes fifth. George Russell, Sainz’s teammate, was unexpectedly ousted in the first round.

Sergio Pérez of Red Bull struggled again in the first qualifying round. He hit the curb, lost the rear at turn eight, and crashed, interrupting the session.

Poor performance again for the Mexican, whose Red Bull berth is in risk after a succession of poor performances, especially in qualification. His contract, recently extended to 2025, may have a performance clause, and Red Bull is unlikely to tolerate him underperforming for long. He was sixteen.

Russell fell behind because Lando Norris Mercedes didn’t fuel the car until the session ended. The British driver was eliminated in 17th place after staying out when the track dried after the break.

Charles Leclerc of Ferrari placed sixth, Fernando Alonso and Lance Stroll of Aston Martin placed seventh and eighth, Daniel Ricciardo of RB placed nine, and Tsunoda placed tenth.

Nico Hülkenberg and Kevin Magnussen of Haas finished 11 and 15, Valtteri Bottas of Sauber 12 and Alex Albon and Logan Sargeant of Williams 13 and 14. Esteban Ocon and Pierre Gasly placed ninth and twentieth for Alpine, while Guanyu Zhou placed eighth for Sauber.

SOURCE: GN

Automotive

M5 Partially Closed as Cullompton-Exeter Crash Hospitalizes Two

(CTN News) – Two people were sent to the hospital for treatment as a result of the M5 tragic vehicle accident that happened in Devon.

The accident between two vehicles was the cause of the disaster. One more consequence of the crash is that it has left the M5 partially blocked to traffic to this day.

Between junction 28 for Cullompton and junction 29 for Exeter, the highway was blocked in both directions; however, one lane on the southbound carriageway has been opened up for previously closed traffic.

In a statement issued by the South Western Ambulance Service NHS Foundation Trust, they stated that they were notified of a traffic accident that had happened in the Exeter district at 2:29 p.m. on Friday, July 12.

M5 happened in Exeter, according to reports.

Furthermore, information was given to them by the South Western Ambulance Service.

To provide medical assistance to those injured, four land ambulances, each with two crews, an air ambulance, a critical care M5 vehicle, a doctor, an operations officer, and a responding officer were dispatched to the scene of the incident.

Furthermore, a critical care vehicle was dispatched. We also dispatched an air ambulance to the scene of the event.

Two patients were transported to their respective hospitals: one was transported by land ambulance to the Royal Devon and Exeter Hospital, while the second patient was flown there by air ambulance.

After being moved, the two patients were sent to hospitals in Devon and Exeter, respectively. Simultaneously, both patients were transferred to their respective sites at the same time.

Here’s what Devon and Somerset M5 Fire and Rescue Service said:

“We responded to the scene of a road traffic collision on the M5 at 2.30 p.m. today, between junctions 28 and 29.” The statement cited above was part of an official declaration.

A car that had been hit by another car coming from the other direction had two persons inside that had been rescued. It had been traveling in the other direction.

We offered support as the people were being taken out of the car. These people are now receiving medical assistance from the ambulance service in order to fulfill their duties.

The event caused significant delays for the M5 and the routes that pass through Exeter during the period when traffic was being redirected. In order to accommodate the traffic, this was being done.

A southbound vehicle experienced wheel failure, causing it to cross the center reserve and merge with the northbound road approaching. The car was going the wrong way, which is why this happened. The vehicle was traveling southward at that precise moment.

National Highways indicated that based on the facts they have provided, it is expected that the police would begin their investigation into the occurrence given the magnitude of the calamity that occurred. The entity that made this information public was National Highways.

The Devon and Cornwall Police Department issued the following statement:

“We know the M5 closure is causing traffic.”

The statement that was released is located beneath you. “We will get people moving safely when we can but please bear with us while we deal with the incident and causalities at the scene.”

In order to accommodate cars and other small vehicles that were traveling on the now-closed northern route towards M5 Taunton and Bristol, the back of the line has been shifted.

This was done to create space for these cars, which were heading towards Taunton and Bristol. The purpose of this activity was to provide space for larger cars. At this point, it seems like more and more vehicles are being stopped from going forward.

Due to this incident, a second lane has been opened up for use by any and all vehicles traveling southward.

SOURCE: ITV

Automotive

Honda to Cease Production at One of its Thailand Auto Factories

(CTN News) – The Japanese vehicle firm Honda Motor made the news in a statement that was posted on Tuesday. The statement stated that the company intends to center its production at the site that it operates in the province of Prachinburi.

As a consequence of this, the production of automobiles will be halted at the facility that it operates in the province of Ayutthaya in Thailand by the year 2025.

The more difficult circumstances that the second-largest car manufacturer in Japan is facing in the country of Thailand, which is located in Eastern Southeast Asia, are exemplified by this move. Thailand is located in Southeast Asia.

There are several reasons for this, including the fact that Chinese firms are determined to grow their market share in Thailand, and a growing number of consumers are expressing an interest in electric vehicles (EVs). They both play a role in contributing to the problem.

The combined output of automobiles produced by Honda’s two facilities has fallen throughout the course of the succeeding four years, going from 228,000 vehicles in 2019 to less than 150,000 vehicles annually. This downward trend has occurred during the course of the past four years.

The preceding four years have been the time period during which this decline has taken place. With regard to the sales that the company has made in Thailand throughout the course of the past four years, there has been a consistent range of less than 100,000 to less than 100,000 for the entirety of this time period.

This is according to Honda’s spokeswoman.

When the factory first opened its doors in 1996, the company anticipates that it would continue to manufacture vehicle components at that location. When the firm finishes manufacturing vehicles at the Ayutthaya facility in the next year, the spokesperson stated that the company intends to continue producing automobile components at the plant.

In accordance with the statement that was given by the spokesman, the Prachinburi factory, which was built in 2016, will be utilized for the purpose of integrating the facilities with which automobiles are created. This was said in the statement. There are only two factories in Thailand that are owned and operated by the vehicle manufacturer, and these two factories are the only ones in the country.

According to the statement made by a spokeswoman for Honda in Thailand, the company’s goal is to reduce the disparity between the number of automobiles it produces and the number of sales it has experienced in the nation.

According to the remark that was made by the spokesman for the company, the automobile manufacturer are already exporting their products from Thailand, particularly to other Southeast Asian countries such as Indonesia and the Philippines. According to a statement that was sent by a spokeswoman for the company.

Currently, Honda has no plans to invest in Thailand.

When it comes to mainland China, Honda and Nissan Motor, a Japanese automobile manufacturer that competes with Honda, have been hit particularly hard by competition from rising Chinese manufacturers.

Nissan Motor is a competitor of Honda. As a result of the fact that these businesses provide reasonably priced plug-in hybrids and electric vehicles that are loaded with software, a significant number of customers have been drawn to them.

Now, Japanese automobile manufacturers are at risk of losing clients in countries outside of China, such as those in Southeast Asia, to Chinese companies that are increasingly attempting to increase the quantity of automobiles they export and build up operations outside of China.

As a result, Honda Japanese automobile manufacturers are facing a potential loss of customers. They are exposed to this danger as a result of the fact that Japanese brands compete with Chinese brands in these locations.

BYD, a Chinese manufacturer of electric vehicles, recently launched a plant in Thailand that will be responsible for the production of automobiles that are powered by electronic batteries.

This plant was established last week. The Chinese electric car manufacturers are beginning to establish facilities in the country, and this factory is a component of the wave of investments that they are making in the country. These investments have a total value that is greater than 1.44 billion dollars together.

SOURCE |SCMP