20 years of China’s auto market post-WTO accession, in one chart

Chinese automakers are now the “wolves” in the smart EV era, not the foreign automakers they once feared 20 years ago.

“The wolf is coming.”

This past Saturday (December 11, 2021) marked the 20th anniversary of China’s official accession into the World Trade Organization (WTO), when the country became the 143rd nation to join the trade body.

Two other breakthrough events of historical significance for China also happened in 2001: winning the bid for the 2008 Beijing Olympic Games and qualifying for the finals of the 2002 FIFA World Cup for the men’s national team.

These were three key events that made every single Chinese proud.

For the country’s auto industry, China’s accession into the WTO marked the beginning of the co-called “4th wave of foreign investment.”

The pundits were crying wolf, saying that the domestic players were doomed now that the country is opening its doors to more foreign automakers by lowering tariffs on imported cars and allowing them to come in and set up more joint ventures.

That fear wasn’t unfounded. Volkswagen already accounted for half of the car market share and some of the early Chinese domestic players had yet to establish themselves in the market. How were they going to face the oncoming competition from these foreign “wolves?”

To answer this question, let’s go back to 2001 and refresh our memory of the key events that shaped the auto market that year.

That year, China sold “merely” 2.36 million automobiles.

That year, there was no concept of new energy vehicles, or NEVs.

That year, just over 720,000 cars were sold, less than those of trucks and buses and accounting for just 30 percent of total auto sales. There was no concept of SUVs. The Buick GL8 was the lone star in the MPV market.

That year, Volkswagen’s joint ventures with SAIC Motor and FAW Group accounted for 50 percent of the car market.

That year, the Volkswagen Santana, Volkswagen Jetta and Citroën Fookang dominated the car market.

That year, the Buick Sail, dubbed as the “RMB100K family sedan,” became the biggest dark horse.

That year, Peugeot announced its intention to return to the Chinese market.

That year, Geely finally received the coveted license to produce cars after years of lobbying.

That year, Chery was still known as SAIC Chery and had exported cars for the first time ever.

That year, Ford announced its intention to establish a JV with Chang’an Auto called Chang’an Ford.

That year, China’s Recommendations for the 10th Five-Year Plan for Economic and Social Development stipulated that “consumption must be expanded, and cars are encouraged to enter families.” This was the first time ever that a Chinese legal document indicated that families were encouraged to purchase cars.

That year, BYD had yet to start making cars.

That year, BMW announced its intention to form a JV with Brilliance Group called BMW Brilliance Automotive (BBA).

That year, Daimler officially established Daimler Greater China Investment Co., Ltd. in Beijing.

That year, Porsche officially entered the Chinese market.

That year, there were only six mainstream vehicle JVs: Shanghai Volkswagen, FAW-Volkswagen, Shanghai-GM, Dongfeng-Peugeot-Citroën (DPCA), Guangzhou Honda and Beijing Jeep. Many foreign automakers had yet to establish JVs or officially enter the Chinese market.

That year, there were only two types of players: traditional foreign automakers and traditional Chinese automakers.

That year, foreign brands were leaders and Chinese brands were followers.

Now let’s fast forward 20 years.

In 2021, China’s auto sales are expected to surpass 26 million units, up about 3 percent and growing for the first time since 2017.

In 2021, NEV sales are expected to hit 3.5 million units, up 156 percent and accounting for more than 13 percent of auto sales.

In 2021, passenger vehicle (including cars, SUVs, MPVs and microvans) are expected to surpass 21 million units, up about 7 percent and accounting for more than 80 percent of auto sales.

In 2021, Volkswagen Group’s market share in China will be only about a third of what it was 20 years ago.

In 2021, the Chinese smart EV startup “Big 3” NIO, Xpeng and Li Auto are spearheading the smart EV market.

In 2021, the Wuling Hongguang MINIEV was the most talked about model in the NEV market.

In 2021, Stellantis Group is trying to be relevant in China despite the early success of Citroën and Peugeot back in the 1990s and early 2000s.

In 2021, Geely has already ballooned to become a multi-brand, multi-market global vehicle, technology and mobility empire.

In 2021, Chery is closing in on cumulative global sales of 10 million vehicles, including nearly 2 million sold outside China.

In 2021, Ford is recovering from misery of recent years past and moving into a crucial phase of its China 2.0 Strategy with key products like the Mustang Mach-E, EVOS and Lincoln Z that look promising on paper.

In 2021, the NEV market reached an inflection point, switching from a policy-driven market to a market-driven market.

In 2021, BYD will become the undisputed leader in the NEV market, and is dangerously becoming an all-NEV brand.

In 2021, BMW has already become a majority shareholder in BBA and will reclaim its sales crown in the luxury vehicle segment. Its other JV with Great Wall Motor — Spotlight Automotive — is about to reveal the first MINI EV model.

In 2021, every three out of four cars Mercedes-Benz sells in China are locally produced, and Daimler Truck is gearing up for the local production of heavy-duty trucks. Oh, BAIC Group and Geely Chairman Li Shufu through Tenaciou3 now hold 9.98% and 9.7% of Daimler, respectively.

In 2021, Porsche is nearing annual sales of 100,000 vehicles in China, which will become its largest market for the 7th year in a row.

In 2021, almost every single foreign automaker has set up 50:50 or majority foreign-owned JVs and even wholly owned foreign ventures (Tesla) in China. But many foreign brands like Fiat, Suzuki, Renault and Mazda have already pulled out of JVs or China completely.

In 2021, there are four categories of players vying for the market: traditional foreign automakers, traditional Chinese automakers, Chinese smart EV startups and new Chinese smart EV startups represented by Xiaomi and Jidu.

In 2021, at least in the NEV market, Chinese brands are leaders, while foreign brands are followers.

In 2021, China sold more vehicles in a month than it did in all of 2001, and more NEVs than it did automobiles 20 years ago.

And look who is leading that charge for the industry transition from ICEVs to NEVs: Chinese companies, rather than those foreign “wolves.” In a way, the “wolves” came but China developed its own, speedier and stronger “wolves.”

The Chinese auto market in the 20 years since the country’s accession into the WTO can largely be divided into two decades and three phases:

Two decades: the first which saw two “gushing” periods of auto sales (2002–2003 and 2009–2010) concluded by the start of the “10 cities, 1,000 vehicles” NEV pilot demonstration program, and the second defined by the cultivation of the NEV market and finally explosive growth exhibited in 2021.

Three phases: the first represented by the gradual opening of the market to both domestic and international players, the second represented by the integration of these players and finally the third represented by Chinese companies leading the industry’s transformation toward electrification, connectivity, autonomous driving, shared mobility and business model innovation.

What holds for the next 10 years and what will the market be like in 2031?

I can’t wait to see it.