In 2023, with the improvement of the competitiveness of China's auto products, the breakthrough of the European and American markets and the Russian market under the Russia-Ukraine crisis, the international brands in the Russian market were fully replaced by Chinese brands, China's auto exports grew rapidly, and exported 5.22 million units in the year, an increase of 53.5% year-on-year, and strong growth for three consecutive years. Europe, Asia and North America are the first, second and third largest markets for Chinese auto exports.

Behind the appearance of rapid growth, the phenomenon of "parallel export" in used car exports needs to be solved, so that used car exports can truly return to the source of long kilometers of used cars. Overall, the internationalization of China's automobile industry is transitioning from the first stage " going out "to the second stage " going in ", and there is a long way to go in the future.

China exported 5.22 million cars, up 53.5 percent

According to statistics released by the General Administration of Customs, China exported 5.22 million cars in 2023, an increase of 53.5%. Starting from 2021, China's automobile exports have continued to grow strongly for three consecutive years, with an annual increment of more than 1 million units, and the annual absolute increment is increasing year by year.

China's automobile exports can be divided into new car exports and used car exports according to whether the export vehicles are registered in the domestic vehicle administration.

The export of new cars is that the vehicles have not completed registration in the domestic vehicle administration, and are directly exported in the form of commercial vehicles. At present, China implements the application approval management system for the total number of new car export enterprises. According to the export scale of automobile production enterprises, overseas after-sales maintenance service outlets and other factors, automobile production enterprises can authorize a certain number of export enterprises (such as the current class of enterprises can authorize 7 export enterprises).

Therefore, the number of enterprises that can obtain the qualification of the new car export industry is very limited, and most companies engaged in the export of automobiles can only engage in the export of used cars. China's current used car export can be divided into zero-kilometer used car export and long-kilometer used car export according to whether the vehicle is actually used. Zero kilometers of used car export, is the completion of the registration of commercial vehicles in the domestic DMV, immediately exported, after two months in the domestic DMV registration cancellation, in essence, is a quasi new car export, and parallel import cars in many aspects just opposite, so, also known as parallel export cars. Long kilometer used car export, is the vehicle in the domestic use for a period of time, driving a certain number of kilometers after the export.

In terms of export volume, our current automobile exports are mainly new car exports. According to the statistics of the China Association of Automobile Manufacturers, the export of new cars in 2023 exceeded 4.91 million units, accounting for more than 94%, and the export of used cars was about 310,000 units.

Specific to the export of automobile groups, since 2020, SAIC has ranked first in national exports for four consecutive years, and has steadily increased year by year, exceeding 1 million units for the first time in 2023 and approaching 1.1 million units. It was followed by Chery Automobile, which increased by 105% year-on-year in 2023 to 925,000 units (accounting for 49% of Chery's total sales of 1.881 million units in 2023), ranking second in export volume for four consecutive years. Tesla exported 340,000 units from its production base in China, ranking third for three consecutive years, and BYD exported 250,000 units a year, although the number is only the seventh in the country, but an increase of 334%, a huge increase.

Shift from "export trade" to "overseas business"

Although China's automobile export volume in 2023 has achieved the first place in the world, it should be seen that the internationalization of China's automobile industry is still in the first stage, and compared with Japan, Germany and the United States and other countries with mature internationalization, we still have a significant gap.

China's auto industry should go from "going out" to "going in" and finally "going up". The so-called "going out" is the current mainstream automobile export trade model. "Going in" is to establish production capacity in foreign target countries to achieve local production and marketing. "Go up" mainly in the realization of foreign localization of production and marketing, to achieve production, sales, after-sales service, financial support, marketing, brand building and other aspects of the mature stage, and began to differentiated product development and the whole industry chain for the differentiated needs of the local market.

Up to now, the internationalization process of China's self-owned brand automobile enterprises has basically experienced three stages: before 2010, mainly the export of commercial vehicles; 2010-2019, mainly low-end passenger car exports to developing countries; Starting in 2020, mainly high-end products and overseas brands to compete in the global market, relying on the first-mover advantage in the field of electric technology, began to impact the European and other developed countries and regional markets, as well as Southeast Asia, the Middle East, Central Asia and other markets to encourage the consumption of new energy vehicles.

In 2023, China's own brand car companies have accelerated the pace of overseas investment, mergers and acquisitions and overseas factory construction, from the simple "export trade" to "overseas business" transformation, toward the second stage of internationalization, among which, Southeast Asia, Eastern Europe, Hungary, Central Asia and other regions have become the current hot spots.

Byd's new plant in Thailand is expected to start production this year with an annual capacity of about 150,000 vehicles. Up to now, BYD has 201 stores in the Asia-Pacific region (including Hong Kong and Macao). Changan Automobile will invest 20 billion baht to build a factory in Thailand, with a total scale of 200,000 vehicles/year and a first-phase production capacity of 100,000 vehicles/year, which will be officially put into production in the first quarter of 2025.

Hungary was the first EU country to sign the "Belt and Road" agreement with China, and has signed free trade agreements with the EU, Canada, South Korea and other countries, which provide more opportunities and competitive advantages for Hungarian exports. In December 2023, BYD announced that it would build the world's leading new energy vehicle manufacturing base in Hungary.

However, the automobile export power, is not equal to the automobile export power. The data show that compared with Japan and Germany, Chinese car companies have obvious shortcomings in terms of overseas localization rate and export amount. Fu Bingfeng, executive vice president and secretary general of the China Association of Automobile Manufacturers, said: "China's automobile exports are increasingly bright, but we should also rationally realize that the number of automobile exports is in accordance with the principle of territorial statistics, which also includes the number of foreign brands in the local production and export of cars, can not simply take the number of automobile exports as a criterion." He stressed that the pace of China's automobile globalization is late, in recent years, a large scale to the international market, Chinese car companies overseas layout and technology output has just begun.

Easing could eliminate 'parallel exports'

At the same time that China's new car exports have repeatedly hit new highs, the volume of used car exports has also increased significantly, skyrocketing from 15,000 in 2021 to 69,000 in 2022, and is expected to exceed 200,000 in 2023, a substantial year-on-year growth.

Among them, the "parallel export car" has contributed a lot, and its sales contribution even exceeds that of long kilometers of used cars. The operation of "parallel export car" is not complicated, first buy a new car at the domestic authorized dealer, and then sell it to the enterprise with the qualification of second-hand car export, which handles the export formalities, completes the export clearance of China Customs, foreign customs import entry, and finally can be sold overseas.

The rapid growth of parallel export cars in recent years, the main factor is that the cars produced in China in terms of technology, products and performance have been no less than the traditional automobile powers such as Japan, Germany and the United States, at the same time, the cars produced in China in terms of cost, price and other aspects due to the huge domestic market and competitive factors have brought advantages, especially in the new energy vehicles, China's comprehensive advantages are more obvious. Therefore, China's new car exports began to have a relatively good industry basis, but when most of the industry companies do not have industry qualifications to carry out new car exports, they can only export quasi-new cars in the way of "parallel export".

It is worth mentioning that the quasi-new car export of the joint venture has been resisted by foreign parties.

According to foreign media reports in January 2024, a German auto trading company named Brudny imported 22 ID.6X models produced by SAIC Volkswagen from China into its own sales channel for sales. To this end, Volkswagen Group launched legal proceedings in Germany, asking the court to declare the trade illegal and destroy the 22 new SAIC Volkswagen ID.6X, and bear the destruction cost of 15,000 euros per car.

Why is this happening? The main reason is that the price of the Volkswagen ID series in China is much lower than that in Germany. The price of the Volkswagen ID3 car in Germany starts at 39,900 euros, about 314,800 yuan, while the price of the Volkswagen ID3 sold in China is only 149,900 yuan. German car dealers directly buy Volkswagen cars from China and ship them back to Germany, even if the import tariff is added, the cost price is lower than that of taking goods directly from Volkswagen in Germany, and it is much lower, so Brudney Company has to choose far and near to import Volkswagen cars produced in China.

First of all, there are no parallel sales channels between China and Europe in the Volkswagen system, and these vehicles can only be produced and sold in China. In addition, different countries have different models in terms of batteries, software and Settings, for example, models sold in Europe must be mandatory equipped with eCall automatic emergency call system, while China does not have this requirement, which will bring a confusing experience to the user who purchased it, but also cause problems that the after-sales network can not solve. Industry insiders believe that in order to solve the phenomenon of quasi new car exports, it is inevitable to relax the policy to expand the number of qualified enterprises.

Used car exports need to return to their roots

At present, among the used cars exported by China, most commercial vehicles are genuine used cars, while many passenger cars are new cars, because China's commercial vehicles, including after-sales maintenance and other costs are relatively low, compared with Japan and South Korea's second-hand commercial vehicles have advantages, while second-hand passenger cars do not have such favorable conditions for the time being. Luo Lei, vice president of the China Automobile Circulation Association, introduced the experience of foreign used car exports, pointing out that Japan's used car exports have grown rapidly in this century, and fell slightly after reaching 1.4 million in 2010. The reason why Japan's used car exports can quickly open the international market is that they have obvious price advantages, and the price of 7-year old vehicles in Japan is basically zero, so many foreigners live in Japan directly from the auction house to take the car. In other words, companies in existing target countries will look for car sources in Japan's local used car market. Data show that among Japan's used car export enterprises, overseas companies account for 70% to 80%. And our country is basically local enterprises in the used car export trade, is their own initiative to go out. Luo Lei stressed that China's used car exports are still in the exploratory stage, and there are signs of a rush after the policy is released. At present, many used car traders will focus their business on "parallel exports", but this kind of business is not the general direction of future industry development, and the future should still focus on long kilometers of used cars. However, the export business of long kilometers of used cars in China is facing difficulties and challenges such as imperfect industry standards, incomplete industrial chain, imperfect foreign sales and after-sales service network, and strong competitors. It is a long way to go to make the industry stronger and bigger.