China is one of the biggest electric car markets in the world. However, it is the foreign brands that seem to have an upper hand in terms of customer preference. Recently released results of a survey conducted by Bernstein private wealth management shows that out of the top three favorite car brands favored by Chinese citizens, only one is from the People’s Republic.
At the number one spot is Shenzhen-based BYD, in which Warren Buffet’s Berkshire Hathaway owns a 24.6 percent stake. The second spot was taken by Elon Musk’s Tesla while Volkswagen claimed the third position. One thousand six hundred people participated in the survey, with their average income being around 19,000 yuan ($2,969) per month and their average age being 32.
Despite foreign brands claiming two of the top three spots, Chinese customers’ intent to buy an electric car made by domestic startups like Xpeng and Nio has risen. Nine and a half percent of survey respondents said they would buy from a Chinese startup, up from just five percent in the last couple of years.
In the “upper mass and premium” segment which represents cars costing 150,000 yuan ($23,437) and above, Chinese startups ranked first. The next favorites are Tesla, BMW, and Audi.
But taking into account the entire car market as a whole, premium German brands came out as people’s most favorite, followed by Japanese and Chinese brands. Electric cars by Chinese startups were only at the sixth position.
You are now signed up for our newsletter
Check your email to complete sign up
Almost half the respondents plan on buying an electric vehicle as their next car, mostly because of its softer impact on the environment, better driving experience, and lower cost of operation.
The report comes amidst a government push to limit the number of players in the electric vehicle market. There are more than 321,000 companies in China associated with “new energy vehicles.”
The number blew up this year after 78,600 new businesses established themselves in the sector. In September, China’s industry minister had stated that there were “too many” electric vehicle manufacturers in the country and that consolidation is necessary.
In an interview with CNBC, Tu Le, founder of Beijing-based advisory firm Sino Auto Insights, called the government move as a “2.0” version of what Beijing did by limiting manufacturing licenses and permits in 2017.
“They likely [saw] a buildup of overcapacity [and] too many brands that won’t be able to compete in the market with product… This has happened often in the Chinese market across sectors and leads to a race to the bottom where companies compete solely on price. It stresses the entire sector since these non-competitive companies are happy to throw good money after the bad,” Tu said.
China’s total auto sales fell by 19.6 percent in September compared to a year back, which was the fifth consecutive month of decline. Though sales of new energy vehicles doubled in September, the overall decline in sales volume has been a dampener for the industry. The numbers are concerning for the auto sector since September and October are typically the high points of annual sales.“The sales drop was due to the domestic power crunch caused partly by the shortage of coal and prolonged global chip shortage that has forced many major automakers to idle or curtail production… the chip supply shortage eased in China last month… the industry body now expects the supply to improve further in the final three months this year but constraints would remain,” Reuters reported citing Chen Shihua, a senior official at CAAM.