Berlin – Until recently, China had lagged behind Germany in car exports. Now, it's exceeding Germany in both internal combustion engine vehicles and electric cars.
While Germany has not yet recovered to its pre-pandemic production levels, China's automotive market is surging at a rapid pace.
Asian websites, referring to the China Association of Automobile Manufacturers (CAAM), report that China exported 4.41 million cars between January and November 2023, marking a significant increase from the previous year. In contrast, Germany exported about 3.11 million cars throughout the entire year, according to the German Association of the Automotive Industry (VDA).
Prior to 2020, China exported less than one million cars and the gap with Germany was substantial. However, the situation drastically changed in 2022 when Beijing exported 2.5 million vehicles, closely approaching Germany's export of 2.6 million vehicles, as per the same German source, before exceeding it for the first time in 2023.
The decline in German car exports, from more than 4 million vehicles in 2017, has played to China's advantage.
The automotive sector, including vehicle parts, is essential for German exports, accounting for about 15.4% in 2022, according to the Federal Statistical Office. Famous German brands exporting abroad include Volkswagen, Audi, Mercedes, and BMW.
VDA's spokesperson, Hans Schumann, acknowledges the serious competition from China and mentions that Chinese companies "want to achieve a strong foothold in local and international markets."
Schumann highlights that the primary difference between the two sides is "the strong government support for the Chinese automotive industry, which distorts the situation."
##The Chinese Partner
Trade figures between China and Germany in the automotive sector show a steady increase in Chinese exports of cars and parts to Germany, contrary to the declining exports from Germany to China.
Because of political opinion differences and Berlin's intent to learn from its previous energy dependence experience with Russia, voices within Germany are calling for a reduction of economic ties with China, Germany's largest trading partner. Especially since the German trade deficit with Beijing reached a record level of 84 billion euros in 2022, raising concerns about economic dependence.
Still, Hans Schumann tells Al Jazeera Net that "in the first half of 2023, Germany exported significantly more cars and parts to China (13.7 billion euros) than it imported (3.7 billion euros), resulting in a strong positive trade balance for Germany in the automotive sector."
However, he notes that "competition remains a positive factor that stimulates innovation," indicating that the German automotive industry plans to invest 250 billion euros in research and development by 2027, and another 130 billion euros in building and upgrading factories.
China is not only a competitor to Germany but also a market for German cars and hosts the largest number of German car factories abroad, with 350 sales and manufacturing points. Data from the German Automotive Industry Association shows that one in every five cars sold in China bears a German brand, and German companies sold 4.4 million vehicles in China in 2022, more than what Germany exported from its domestic factories.
"The sales market in China is of great significance for German car manufacturers, which is why they have built significant production capacities in China," says Martin Gornig, a senior researcher at the German Institute for Economic Research, speaking to Al Jazeera Net. He notes that current production numbers for German automobiles are below pre-COVID crisis levels for reasons that are not clear.
##Electric Cars: Germany's Salvation
The German government aims to have 15 million electric cars on its roads by 2030 as part of the European strategy to ban the sale of internal combustion engine vehicles. However, sector professionals are skeptical of this target due to the high prices of electric cars compared to conventional vehicles and the lack of strong financial support from the government.
In Germany, the use of electric vehicles accounted for only 2.4% of the total number of vehicles in 2022, according to the Federal Motor Transport Authority, while in China, this figure stands at 22%, which is significant given the size of the Chinese market, as per statistics from the World Resources Institute. China has about 312 million registered vehicles in contrast to Germany's 49 million.
"The modest development in electric vehicle registrations in Germany is largely due to the problems faced by German car manufacturers in transitioning from conventional to electric vehicles," Gornig points out, suggesting that there could be other factors, such as inadequate financing and a lack of electric charging stations.
Nonetheless, Germany saw a surge in electric car production in 2023 with 673,000 vehicles produced, an increase of 93% within the country, mainly full battery electric vehicles (BEVs), according to the German Automotive Industry Association, which confirms that this was the highest number in Europe during this period.
Yet, China significantly outperforms Germany in this sector, with the Chinese company BYD alone selling 1.57 million electric vehicles in 2023, even surpassing Tesla, and Chinese electric cars convincing more users with competitive pricing.
German companies are racing to catch up with China. Schumann asserts that German manufacturers will offer 160 different electronic models globally by 2024, claiming that innovation will be the hallmark of new German electric cars.
He adds that German companies also plan to manufacture 15 million electric vehicles by 2030 and will strive to meet consumers' needs, including those in China, who use cars as a space for solitude, in a bid to compete with China in its local market.
