Chinese Carmakers Struggling With Market Share Domestically

Even though it seemed like a good idea at first, the bulk of Chinese automakers investing heavily in electrified vehicles these past few years hasn’t turned out the way they would have hoped.

Brands such as Geely are continuing to lose market share domestically, with sales dropping more than 20% for the fourth straight month this July, while China’s economic growth went down to 6.2% in the second quarter of 2019, from 6.6% for all of last year.

While domestic brands mostly sell compact and subcompact sedans and crossovers aimed at low-income customers, the latter are now more likely to cut discretionary spending on big-ticket items such as automobiles, reports Autonews Europe.

In Geely’s case, three new products were launched this year: their first MPV, a compact crossover closely related to the Volvo XC40, and a compact car that sits under the electric vehicle brand Geometry. However, none of these new models have moved the needle significantly, with sales falling 24% to 91,375 units last month.

Also read: China’s Baidu Partners With Geely And Toyota On AI Tech

But why has the tide turned on electrification as a strategy in China? On June 25, Beijing finished cutting subsidies by more than 50% for both EVs as well as plug-in hybrid models, leading to fewer sales and less overall demand.

Another major Chinese carmaker, Jianghuai Automobile, saw its EV sales fall a massive 66% last month – this goes to show that consumers have little interest in environmentally friendly vehicles if government subsidies prove insufficient.

With Beijing looking to phase out remaining subsidies for electrified cars by the end of this year, it appears that Chinese brands will continue to struggle on their home turf.