Here are the key narratives
It’s the first Monday in September and last day of the Labor Day weekend here in the U.S., which means the official end of summer and the beginning of a new school year.
On the other side of the world, preparations are underway for the Beijing Auto Show, otherwise known as Auto China 2020 or the the 2020 Beijing International Automotive Exhibition. Less than three weeks remain until the start of the show on September 26 at the Beijing New International Exhibition Center.
It feels weird to be talking about the Beijing Auto Show in September, a time normally reserved for the Paris Motor Show (in even years), the IAA a.k.a. Frankfurt Motor Show (in odd years) or the IAA Commercial Vehicles in Hannover (in even years).
Then again, nothing is weird anymore after what all of us had to go through (and are still going though) this year, right?
With the organizers of the LA Auto Show announcing last week that this year’s edition originally planned for November 20–29 will instead move to May 21–31, 2021 because of the pandemic, Beijing Auto Show becomes the largest and only major “A-level” international auto show to be held in person this year, anywhere in the world (the more regionally-focused but less international Chengdu Motor Show was held in July and Guangzhou Auto Show should be on as scheduled in November). With next year’s Shanghai Auto Show in April looming and the Geneva Auto Show in March in jeopardy again, we might see two straight international auto shows held in person in China without any others held elsewhere in between (CES, which has become an “auto show,” will be held virtually next January).
Normally held in June in its early years dating back to the first edition in 1990, Beijing Auto Show has been held in the month of April since 2008 to avoid the summer heat (in 2006 it was held in November due to a squabble among the organizers and lack of readiness of a new exhibition venue, for some of you that remember). Due to the pandemic, the organizers announced in early April to push back the show five months from the originally scheduled dates of April 23–30 to September 26-October 5.
So, what can we look forward to at this year’s show? What will be the key narratives and storylines for the first major international auto show of the 2020s to be held in person? Here are some of my thoughts:
Toned down and more “frugal”
The organizers opened up online press accreditation last Friday and the media has until September 25 to register online to attend the event. Sadly, yours truly will not be able to attend in person this year because he is stuck on the other side of the world, looking on from the sidelines.
That probably will apply to many of you out there, who is in the profession but not able to travel internationally due to the pandemic and some of the travel restrictions in place, and frankly, simply for the sake of staying safe.
The same holds true for many CEOs of global automakers, who will not be able to make it to the event in person. Normally, their presence at the event or not is often directly correlated to how important the Chinse market is for their companies. Not going to happen this year. So look for pre-recorded video messages from these big shots at press conferences.
Speaking of press conferences, they will probably be more toned down and less sophisticated than usual. Look for automakers to unveil their new models and get their messages across in a more straight forward manner rather than putting on glitzy shows and extended speeches. And, as is the custom with auto shows, look for brands to hold individual unveil events — often called “brand nights” — way ahead of the actual show. Half of the show will be over before it even starts, that’s the way I would put it.
As for the visitors to the show, the organizers likely will put on some kind of control as far as traffic is concerned. Social distancing obviously is not going to be possible, but keeping tabs on the amount of people that can enter the exhibition halls is.
Putting all these factors together, this year’s Beijing Auto Show, though still with 200,000 square meters of exhibition space according to the organizers, will be “downsized” as far as traffic is concerned. Though the timing of the event will coincide with the National Day and Mid-Autumn Festival holiday break in early October, something that the organizers hope will attract more visitors on break during the “Golden Week.”
Races among and within each of the “three forces”
Occupying those 200,000 square meters of space will be stands of nearly every single mainstream Chinese and foreign brands, according to the organizers. Once again, the traditional foreign brands, traditional Chinese brands and Chinse smart EV startups — what I call the “three forces” — will be competing for the limelight and traffic, and most importantly, your pocket for one of their newest models.
With the slowdown of the market over the last two years that is exacerbated by this year’s pandemic, the gap between the front runners and the laggards in each of the “three forces” has widened as far as sales volume and market share are concerned, and consolidation is accelerating.
In the traditional foreign brand camp, German brands led by Volkswagen and Japanese brands led by Toyota have had an upper hand over their American, Korean and French counterparts. The German and Japanese brands in fact accounted for nearly half of the passenger vehicle market in the first seven months of this year, with Chinese brands accounting for about 36 percent of the market, according to the latest data available from China Association of Automobile Manufacturers (CAAM). They have simply been faster at introducing new and refreshed models that adapt to Chinese consumers’ rapidly change tastes. Renault has bid adieu to the Chinese market in the passenger vehicle segment, while PSA and FCA, in the midst of a difficult merger process, are in a funk as far as their mainstream brands are concerned. American and Korean brands are slowly recovering, but continue to face strong headwinds.
The traditional Chinese brand camp overall has seen its market share shrink (from percentages in the high 40s to the mid-30s) due in part to their overreliance on SUVs and strong model offensives from the German and Japanese brands, which continue to dominated the passenger car brands and gaining market share fast in the SUV segment. Within it though, the Geelys, Havals, Chang’ans, Cherys and BYDs are lapping their smaller rivals such as the Zotyes, Lifans, Leoppards and Hawtais which are in danger of becoming history. A big story this year is obviously the resurgence of the Red Flag, China’s indigenous luxury brand, which has been on a tear as far as sales are concerned. It’s one of the feel-good and surprise stories of the year, bucking the overall downward market trend with triple-digit growths.
As for the Chinese smart EV startup camp? It’s simple: it’s pretty much the “Big Four” of NIO, Li Auto, Xpeng Motors and WM Motor and everyone else. What a difference two years make: just two years ago at the time of the previous Beijing Auto Show, NIO had not delivered a single model, and Li Auto and Xpeng Motors were still months away from delivering their first models. Now, they are all U.S.-listed companies with WM Motor set to be listed on China’s Sci-Tech board soon.
One of the highlights from this camp will be the global debut of the HiPhi X from Human Horizon’s HiPhi brand launched a little more than a year ago, against the backdrop of demise of several brands like BYTON, Bordrin and Singulato.
An additional highlight will be the debut of new high-end brands VOYAH and ARCFOX from traditional state-owned automakers Dongfeng and BAIC. You could put them in either the traditional Chinese brand or the Chinese smart EV startup camp. Regardless, it’s their trump cards to move high-end with smarter electric cars. Then there’s Qoros, which is making a “comeback” with the new Qoros 7.
So look for the strong and new to make the headlines, and the race among and within each of the “three forces” to be on fully display at the show.
SUV and EV galore and allure
China sold more SUVs than passenger cars — 4.449 million vs. 4.445 million units — in the first seven months of this year, according to CAAM. The recovery of the NEV segment, on the other hand, has been much slower: less than half a million units were sold during the same period, still down about a third from prior year levels.
Nevertheless, expect to see yet another swath of SUVs and EVs, or better yet, some combination of the two, debuting at the Beijing Auto Show. Almost every brand should be unveiling one or two if not more of these types of vehicles. If you are not already in this game, something is wrong. Heck, Volkswagen brand just unveiled the Tiguan X, its 11th SUV model in China at an event this evening in Chengdu. Just two and a half years ago when it launched the “Move Forward” SUV strategy in China, it had only three SUV models in its lineup. The brand’s first battery electric SUV, the ID.4, which localizes production soon, should make its global debut ahead of the show.
New models, new era
Some of the new models unveiled globally earlier this year, including the ENYAQ iV from Škoda, new S-Class from Mercedes-Benz, iX3 from BMW and Ariya from Nissan, to name a few, will likely make their Asian debuts at the Beijing Auto Show. The Ariya, for example, will be available in the Chinese market in about a year’s time. These new models usher in completely new era for their brands and will serve as their respective “halo” cars pointing to the future. The success of these models obviously hinges in large part on the Chinse market.
BaaS
NIO made waves last month when it announced its Battery as a Service (BaaS) subscription model that allows users to purchase its vehicles for ¥70,000 less from the original selling price and pay a monthly subscription fee of ¥980 for the battery pack.
“The BaaS model has long been planned with our unique battery swap technologies. The successful launch of the BaaS model will enable NIO users to benefit from the lower initial purchase prices of our products, flexible battery upgrade options and assurance of battery performance,” NIO Founder, Chairman and CEO William Li said. As of September 7, NIO had deployed 147 battery swap stations across nearly 70 cities in China.
Not long after, Xpeng Motors launched its own battery leasing service, though which customers can lease batteries on select G3s and P7s via an 84-month program, paying a monthly fee of either ¥780 for the G3 or ¥980 for the P7. The only difference is that at the end of the lease term, Xpeng owners own the battery whereas NIO owners do not.
China’s updated NEV subsidy policy specifically gives support for battery swappable NEVs, and there is a lot of talk about expanding the battery swapping infrastructure. Outlook seems to be rosy as China might become the only country where battery swapping will be deployed and supported on a large scale.
Look for additional announcements in this area at the Beijing Auto Show.
The big question that remains is, different EVs can be charged at the same charing piles, but it isn’t the case for battery swapping. Can it ever become an open model rather than being exclusive to individual brands?
Sales recovery
The latest numbers revealed by CAAM show that August auto sales are expected to increase 11.3 percent to 2.18 million units, and sales in the first eight months of the year will “only” fall 9.7 percent to just under 15 million units.
The key number here is 9.7 percent. Cumulative percentage downfall of the market has moved into the single digit range, after January-February sales fell 42 percent. If the current continues, whole year sales are likely to end up down only in the low single digit-range. It will be an amazing rebound. NEV sales aren’t going to recover as fast but I wouldn’t be surprised with national and local preferential policies such as increasing quotas for NEVs and promotional policies in rural areas for designated NEVs, that there will be a late surge in sales for the remaining months, pushing whole year sales past the 1 million-unit mark again.
The Beijing Auto Show obviously will be a huge platform for all the brands as a new model launch and promotional platform to drive sales for the remaining of the year toward annual targets.
Tesla watch
Well, Tesla is in a league of its own. It’s pretty much in the news almost every day, so it really doesn’t need an auto show to be in the spotlight.
The Model Y produced at Gigafactory Shanghai was recently spotted in China in a camouflage. Don’t be surprised if Tesla puts it on display at the Beijing Auto Show even though official production is not supposed to begin early next year (I think it’ll begin much sooner than that, perhaps in December, like what happened with the Model 3 late last year).
And no, Tesla and Volkswagen are not doing any deals. At least not yet, according to Volkswagen Group CEO Dr. Herbert Diess, who made it clear in a LinkedIn post today of his “rendezvous” with Tesla CEO Elon Musk last Thursday at an airport in Braunschweig. But then again, Dr. Diess already made Musk into a nice salesman for the ID.3. So in fact they are already working together. Sort of.
Oh, by the way, exactly one year from today, the new IAA 2021 will start in Munich.
Here’s a list of some of the new models that will debut at the Beijing Auto Show, either for the time globally or in Asia, in no particular order (do you recognize some of the brands and models listed here?):
ARCFOX αT
Audi A3L
Audi e-tron (locally produced)
Audi Q5L Sportback
BMW iX3
BYD Song Plus EV
Cadillac LYRIQ
Chery Ant EV
FAW Besturn E01
Ford Mustang Mach-E
Geely Preface
HiPhi X
Honda CR-V PHEV
BYD Qin D1
Honda LIFE
Honda M-NV
Hyundai Elantra
Lexus LF-30
LYNK & CO DC1E Concept
Mercedes-Benz S-Class
MG new SUV
NETA Eureka 03 Concept
NIO ET
Nissan Ariya
Nissan GT-R50
Polestar Precept
Red Flag E-HS9
Red Flag H9+
Roewe MARVEL-R
Škoda ENYAQ iV
Tesla Model Y
Volkswagen Golf 8
Volkswagen ID.4
Volkswagen Tiguan X
Volvo XC40 Recharge
Wuling Victory
