Alberto García M

July 6, 2023

China is known to be a great imitator of products and replicates everything from commodities
to advanced technology, so the automotive market would be no exception in its quest to
generate business in view of a worldwide expansion.
The first attempt in Mexico to sell and distribute Chinese cars was by the
FAW brand, which could be considered a resounding failure in every way: its
quality was abysmal, it did not manage to popularize the sale of its models
as expected until it closed its business in Mexico.
Following the reference of our country, there are six assemblers that we are
beginning to know in the streets: JAC, MG motor, Chirey, BAIC, JMC and
The market proposal of these automakers is not really different from what
is offered by the most coveted brands with a historical market positioning,
such as Kia, Toyota, Ford, Chevrolet, VW, Mazda, etc. The big difference lies
in the specialty of the Chinese: the same, but cheaper, i.e., they seek to
emulate the design, functionality and performance of their cars but with
lower costs than the competition.

What impact will it have on the global market?

Definitely significant since the automotive industry is one of the most
relevant (as important as the financial sector or real estate), so its effects
may not be as good for the main automakers in the world as those
mentioned above. According to the Statista portal, in 2017, 95.893 million
cars were sold in the world, but in 2020, during the entry of COVID-19,
only 78.774 million were sold, and in 2022, around 79.5 million
, which
implies being far from the boom prior to the pandemic.
With 2022 data, Toyota and VW Group, lead the automotive sales with an
approximate 20% share of the entire automotive market versus
China-based companies at 36% of the global market.
As we can identify, Chinese assemblers are a relevant part of the industry
and are not just any competitor in terms of volume and resources; it is true
that their largest market comes from sales in their own country, which is
enough to begin a process of global expansion without fear of competing
with historical brands.

What are the implications for the financial markets?

Knowing that the automotive industry has been in a decline for the last 3
years, there is a good perspective of recovery towards 2030, I would even
dare to say that there is a good investment opportunity in the sector
however, the entry of cheaper Chinese cars could generate turbulence
among the main automakers worldwide, which would mean prolonging
their recovery due to greater competition, considering that the recovery
margin is quite high.
The real question is, can Chinese automakers be competitive in terms of
We have already seen similar phenomena, such as the story of
Huawei competing head to head with Samsung or Motorola in the
Smartphone market and the result was an initial boom for the Asian
company, in which its models were similar with greater functionality and
lower cost. After the initial success, Huawei’s models fell apart, for various
reasons unrelated even to their products, but also a fact was that their
equipment had a lower average durability than their competitors. Will the
same thing happen with their vehicles? Only time will tell; we will see how
attractive it can be to invest in these companies and purchase their cars.
If you have any additional questions, please contact me directly at or in my social network LinkedIn as Alberto García