An influx of Chinese brands over the next 12-24 months could drive down prices of both battery electric vehicles and petrol and diesel models, according to Cox Automotive.

Philip Nothard, insight and strategy director at Cox Automotive

In the latest edition of Cox Automotive’s AutoFocus digital magazine, professional services giant Grant Thornton says European OEMs can expect an increased market presence from Chinese BEV manufacturers such as BYD – with the resulting competition pushing down BEV and ICE vehicle prices and putting European OEMs’ margins under pressure.

Owen Edwards, head of downstream automotive at Grant Thornton UK LLP, said there was evidence that Chinese brands were taking the pricing war not only to BEVs but also to ICE vehicles.

“With China’s advanced battery technology, sourcing of raw materials and more advanced BEV supply chain, Chinese OEMs can manufacture BEVs at €10,000 cheaper than European automakers, representing a significant cost advantage,” he explained.

Philip Nothard, insight and strategy director at Cox Automotive, added that Chinese OEMs are set to target the European market to keep their growth trend going.

“Chinese brands are pricing aggressively in their home market and clearly show more willingness to compete on price than the European and American incumbent OEMs such as BMW, Stellantis, Mercedes Benz, Ford, and Tesla.

“Currently, retail prices for Chinese brands are not significantly lower than European and American OEMs. However, they are substantially better equipped with full infotainment and ADAS systems. In contrast, the European and American OEMs are falling short in providing this as standard equipment for their vehicles.”

But Grant Thornton’s Owen Edwards explained that European OEMs remain in a stable position and there was the possibility for the EU to react to the influx of Chinese vehicles in the region by imposing further tariffs on imported vehicles to protect the domestic sector.

Philip Nothard concluded: “The growing influence of Chinese brands adds another potential headwind for UK OEMs to counter in 2023. It’s also likely that the supply and demand for vehicles could be affected by any trade disruption caused by intensifying protectionism and sanctions. In addition, the UK’s Department of Transport is consulting on its Zero Emissions Vehicle policy. This could mandate automotive manufacturers to register a certain number of zero-emission cars and vans in the UK by 2024, in preparation for a 2030 ban on new pure petrol and diesel vehicles.”

The full article can be found here.