Chinese carmakers ‘taking Gulf by storm’

Reuters

• Chinese carmakers a hit in GCC
• 12-fold growth in six years
• Growing consumer confidence

Chinese carmakers now claim a sizeable chunk of new car sales in the Gulf and it is likely they will increase their market share further by wooing regional consumers through their vehicles’ innovative designs and perceived value for money.

That is the prediction of Amir Khurshid, CEO of Saudi Arabia’s ThinkDirect Automotive Consulting and an expert on Chinese car brands.

Chinese automakers had a 12 percent share of new vehicle sales in the GCC last year, Khurshid said, citing data from industry analyst MEAC. This is up from less than 1 percent in 2017. 

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Khurshid predicts China’s market share will increase to 14 percent this year, although it varies across the Gulf. In 2023 Chinese vehicles had a market share of around 16 percent in Oman and 12 percent in both Saudi Arabia and Bahrain, but 8-9 percent in Qatar, Khurshid explained.

Chinese automakers have taken the GCC market “by storm”, he said, winning market share initially from Korean brands such as Kia and Hyundai and increasingly now from Japanese, American and European manufacturers.

“Chinese brands compete against other Chinese as well as against other countries of origin,” said Khurshid.

Longer-established automakers are responding to this competition.

Chinese automakers are “bringing efficient cost and value, and challenging the status quo”, said Samir Cherfan, chief operating officer of Stellantis Middle East and Africa.

Stellantis was formed in 2021 through a merger of Peugeot and Fiat Chrysler Automobiles and counts Jeep, Maserati and Alfa Romeo among its many brands. It has extensive operations in the Middle East and Africa region, not only in terms of sales but also manufacturing vehicles.

“Our industrial strategy, our sourcing performance strategy, is a way of answering the Chinese because my production is at Chinese cost,” said Cherfan, whose company hopes to increase its share of GCC new vehicle sales to 4 percent this year, from 2.5 percent in 2023.

The most popular Chinese car brands in the Gulf include Changan and Geely, plus MG – the venerable British carmaker bought in 2005 by China’s Nanjing Automobile Corp, which itself was later acquired by state-owned SAIC Motor Corp.

Khurshid cites several reasons for the surging popularity of Chinese vehicles in the Gulf. A pivotal aspect is growing consumer confidence in China’s technological knowhow.

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“People can see their iPhone is made in China, so its general acceptability as a country of origin has improved,” he said.

Also, Chinese car designs appeal to Gulf consumers, whose demographics skew younger than in Europe or North America. Another attraction is the vehicles’ advanced features which come as standard.

“For similar specs, you pay extra in European cars, and sometimes Japanese and Korean cars too,” so Chinese cars deliver more value for the price, said Khurshid.

“Their marketing has improved a lot and they’re focused a lot on SUVs and the [small family car] C-segment, which is popular in this part of the world.

“So it’s the right product, modern design, quality interiors, loaded with features at very good prices.”

Chinese vehicle exports

China exported nearly 5 million vehicles worldwide in the first nine months of 2023, up 58 percent year on year, according to the most recent data from the China Association of Automobile Manufacturers.

The industry body announced in January that China had overtaken Japan as the world’s top vehicle exporter, Reuters reported.

According to Car News China, Saudi Arabia is the fifth-largest destination market for Chinese car exports.

Foreign automakers have also launched manufacturing plants in China, and Ford’s two top-selling models in the Gulf – the Ford Territory and the Ford Taurus – were made there, Khurshid said.

Although electric vehicles represent about one-quarter of Chinese vehicle exports, the Chinese models sold in the Gulf are almost entirely powered by internal combustion engines with little demand for EVs or hybrids, said Khurshid.

He attributes this wariness of electric cars to three factors: range anxiety, worries about resale value and a fear of technological obsolescence as newer models make older versions seem antiquated.

As demand for EVs increases in the Gulf, however, Khurshid foresees Chinese automakers winning even greater regional market share.