Renault In China, The Car Market Of This Century



We recently wrote about the Renault-Nissan-Mitsubishi partnership investing heavily in new mobility in China. Two things here: new mobility and China.

Let’s start with the Chinese car market. This is the most important car market in the world because it is huge, but still largely untapped.

China is the biggest market by far – 28m vehicles sold in 2018 vs the USA at 17m. This is in the middle of a slump in Chinese sales and the US market near record territory. At the moment total Chines sales are about 5m units less than the US and Europe combined, numbers two and three respectively.

US and European markets are mature, however, with car sales and ownership per capita quite static. In comparison, the Chinese market boomed over the last two decades – from insignificant to just under 6m sales in 2005, to passing average yearly US sales in 2010. US sales were constant at around 17m during this time, except for the slump following the 2008 economic crisis.

Chinese car ownership is still at its infancy, very low at 141 cars per 1000 people, vs the mature market figures of 800 for the USA and 600 in Europe.

To give you a snapshot of the Chinese market, consider the following:

  • 68% of car sales are to first-time buyers
  • 56% are married and have children
  • 56% are well educated
  • 50% are between 25 and 35 years old
  • 50% earn between R22 000 and R45 000 per month.
  • New technology is central to their lifestyle and spending habits
  • They place a premium on luxury, spaciousness and safety.

So most Chinese buyers are first generation car owners. This means they have none of the expectations that may stifle change in traditional car societies. They are young, affluent in an emerging market, open to new tech and attracted to the very features that make desirable cars just that. Many of them have children that will grow up in the new car culture created by their parents.

These factors make the Chinese automotive market ideal for developing and selling new mobility cars. For example, 60% of all electric vehicles sold in 2018 was in China, 760 000 vehicles. Such volumes make China the ideal country to develop new technology because the huge development costs could be amortized by the potentially enormous sales.

Their lack of car tradition makes the introduction of other aspects of new mobility more likely. If your parents never owned a car and you are new to it, you would more easily accept revolutionary ideas. New technology such as self-driving cars or shared cars, or self-driving, electrically propelled shared cars would seem natural.

This is the market that the Renault-Nissan-Mitsubishi partnership has invested so heavily in. The reasons are obvious and the opportunities myriad. But to thrive in China you have to invest there. The Partnership has already entered into joint ventures with several Chinese auto firms to develop EV’s, light delivery vehicles and SUVs and so on specifically for that market.

The current sales slump notwithstanding, China remains the automotive story of this century.

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