Next stage of country's automotive global expansion lies ahead
China's automotive industry has firmly established itself on the global stage, with the next phase of its international expansion set to be driven by localization and synergy between parts suppliers and carmakers, according to a new report from consultancy Roland Berger.
The report suggests that Chinese automakers should transition from merely exporting products to developing comprehensive localized capabilities in order to expand their global markets.
"The overseas expansion of the Chinese auto industry should focus on a localized layout for the entire industry chain," said Ron Zheng, a senior partner at Roland Berger and head of its automotive practice in Asia.
He added that auto parts suppliers play an essential role in driving the globalization of the Chinese automotive industry by collaborating with automakers. This synergy requires automakers and component suppliers to align their global strategies and co-plan their international presence. By establishing industry clusters overseas, companies can lower integrated costs, ensure supply chain security and create a more resilient automotive ecosystem.
Chinese parts suppliers are undergoing a significant transformation. Historically, these companies relied on low labor costs and a trade-oriented model to replace local parts in European and American markets, primarily focused on traditional components.
The trend is now towards high-tech sectors, with power batteries, electric drive systems, and intelligent components leading the growth of China's automotive exports. This transition is supported by China's world-leading supply chain technology and efficiency.
The report highlights the scale of this expansion, with the export value of Chinese auto parts and accessories reaching over 670 billion yuan ($95.6 billion) in 2024. Furthermore, the output value of Chinese parts companies from overseas production exceeded 250 billion yuan. More than 300 factories have been invested in and built overseas so far with another 100 plants in the planning stages.
However, Roland Berger pointed out that many Chinese parts suppliers face challenges in global expansion. These include unclear strategic positioning, inadequate adaptation of operating systems and inefficient organization.
To achieve sustainable growth, Chinese auto parts companies should strengthen their global capabilities by refining their market positioning, developing products tailored to local needs and cultivating international talent teams.
Zheng also said that enhanced localization in research and development, production and supply systems is crucial for the industry to reach a more mature stage of global operations.
The gap in localization becomes evident when comparing Chinese brands to established global competitors. According to the report, the localization rate for Chinese brands (defined as overseas production divided by overseas sales) stands at about 30 percent.
This is significantly lower than the localization rate of 80 percent or more maintained by European, Japanese, and US automakers. Closing this gap is crucial for China to align its global production footprint with its position as a leading vehicle exporter.
Roland Berger predicts that the global passenger car market will exceed 93 million units by 2030.
During this period, Chinese automakers are expected to surpass European counterparts in certain segments. Overseas sales could potentially reach between 7.5 and 10 million units, representing a global market share of 15-20 percent.
A decisive transition lies ahead for China's auto industry; moving beyond a single product to prioritizing the cultivation of long-term capabilities and brand value.
This includes establishing cost advantages through local manufacturing, fostering market-oriented R&D innovation and developing independent sales and service networks.
These would all enable Chinese companies to navigate trade barriers, mitigate operational risks and gain the trust of consumers worldwide, said Roland Berger.
wangyuchen@chinadaily.com.cn
