Japan and Germany’s auto industries (including overseas factories) boast the top two car market shares worldwide; the former auto industry kingdom, the US, has been gradually falling behind the top two powers. As for Chinese self-owned car brands, their sales record reached a historic high of 9.5 million units last year; if this trend continues, they will achieve the 10-million milestone this year, closing the gap between their US counterpart. There are five factors behind the rapid change in the car industry in the past decade:
- America’s financial crisis in 2008 dragged the country’s auto industry from its throne.
- Japan’s cutting-edge hybrid technology went well with the global trend of environmental protection and drove car sales.
- Germany strives to develop budget models (especially for MB, BMW, and Audi) to attract young consumers and further expand its customer base.
- The explosively-growing Chinese market becomes the hotly contested spot of all the major carmakers. If these carmakers lack localized product and business model, it would be hard for them to gain a foothold in Chinese market, and consequently, lose their chances to fight for the throne of global sales competition.
- The advent of EVs turned the traditional market upside down. Startups, Chinese self-owned brands, tech-giant investments, alliances of automakers and tech companies, the chip shortage and fight for raw materials, the transition of supply chain from vertical to horizontal type, etc. These drastic changes in the past five years have set the fate of many automakers and even national car industries for the next fifteen years. When traditional carmakers suddenly realize many unforeseen competitors have surpassed them in the future tech race, their lack of competitiveness in key techs is set in stone, and they will see a continuous fall in terms of market share and profitability.
Aside from automakers’ business tactics, auto giant countries’ car industries and consumer policies will influence the car market development in the next decade.
- Due to the federal nature of the US government and its state-independent laws, the EV development between each state varies drastically. For example, only California has confirmed the goal of going net zero in 2035. Additionally, public charging deployment across all US states has been stagnant, and EVs’ sales ratio in the US lags significantly behind Europe and China. Moreover, the recently-passed laws from the federal government that regulate local content rates and domestic raw material purchases will reduce foreign carmakers’ willingness to invest and develop in the US. These industrial “lockdown” policies will not assist domestic automakers in any way and will have a sizable impact on the country’s free contention spirit. The giant yet hollow domestic demand will not return the US market to its former glory.
- Germany’s ICE car technologies remain the best worldwide. As a result, it has been hard for the country to abandon its great advantage. Due to German auto unions’ formidable influence, even if automakers decided to invest in developing EVs in the future, they would experience fierce internal debates (for the EV assemblies require less direct labor, and many component suppliers would face closure without business transformations) and even pressure to the government. To sum up, even with the German government’s resolve to push for EV developments, its auto industry would still face great obstacles like labor rights to work and Germany’s weak ICT and battery industry in their quest to maintain superiority in the future global market.
- With Toyota’s long-lasting lead in the Japanese car industry, Japan’s teamwork-oriented car industry culture hasn’t seen a company or startup like Tesla jump head first into developing EVs. At the end of last year, the president of Toyota finally made a giant step for the industry, vowing to invest in the EV industry. As a result, the Japanese government could finally plan on expanding its subsidies to jump-start the domestic demand for EVs. However, the sales ratio of EVs in the first half of this year marked a disappointing 1% (much lower than in Taiwan), indicating the Japanese auto industry has fallen behind significantly in the age of EVs; especially after 2025, when foreign carmakers launch various EV models, Japanese car industry should suffer the impact of global market share drop.
- The Chinese government had already regarded its development of NEVs as a national policy. As a result of extensive planning and self-owned brands’ many years of hard work, the Chinese car market has gone through a drastic transformation and signaled grave danger for international JV brands in just two years. Self-owned brands and startups have been powering through the expansive domestic market and expanding business opportunities overseas, making China the second largest car exporter after Germany (many Chinese brands are still setting up their global production network).
In conclusion, Japan, Germany, and China will be the major players in the global car industry in ten years, although Japanese carmakers may see a gradual decline in total market share due to their late development of new-age EVs. With an equally lackluster projection, German automakers may have a chance to hold their own before the implementation of net zero regulations because of their inherent advantage in ICE car techs. As for China, self-owned brands would see explosive growth before 2025, challenging times between 2025 and 2030 (a sizable die-out might occur should they fail to overcome the trial of newly-launched EV models from traditional major carmakers), and a likely dominance in the global car market after 2030.