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The UK and mainland Europe are expected to see an influx of Chinese brands over the next 12-24 months as Chinese BEV automakers supply discounted product offerings to the premium and mass markets.
This could depress the prices of BEV and ICE vehicles and hurt European automakers’ margins, according to Owen Edwards, head of downstream automotive at Grant Thornton UK.
Edwards, who participated in Cox Automotive’s AutoFocus insights update, said: “With China’s advanced battery technology, raw material sources and a more sophisticated BEV supply chain, Chinese OEMs can manufacture BEVs for €10,000 less than European automakers, representing significant cost advantage. .
“Today, OEM profitability remains strong in the face of supply chain disruptions as a shortage of vehicles means retail prices for vehicles remain high, allowing OEM margins in 2021 and early 2022 to hold up well.
“However, rising raw material prices and further disruptions in supply chains caused by gas shortages in Europe are seeing the profits of many OEMs begin to wane.”
Philip Nothard, director of insights and strategy at Cox Automotive, said: “The growing influence of Chinese brands adds another potential obstacle for UK OEMs to overcome in 2023.
“It is also possible that the supply and demand for vehicles could be affected by trade disruptions caused by increased protectionism and sanctions.
Click here for Grant Thornton’s full analysis
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