World of Cars Exceeded Modest Expectations, Impressively Delivers
The Paris Motor Show, held at the Porte de Versailles show grounds on a rainy Monday morning, was a showcase for the latest offerings from both Chinese and French automakers.
Chinese OEMs, including BYD and Great Wall Motors (WEY/ORA), made a significant presence at the event, showcasing their European product offensives. Notably, BYD aims to launch two premium products, the Tang SUV and Han saloon, priced similarly to Mercedes's EQE.
The interiors of these Chinese models, such as the BYD Atto 3 and Ora Funky Cat, have passed the initial scaling phase in their domestic market and offer a more reassuring quality feel in the mid-price segment. However, they do not yet close the gap to German premium manufacturers in terms of interior feel and materials. The interiors are more equal to models from DS (Stellantis).
On the other hand, French OEMs, such as Renault, may be at a disadvantage in passing costs on and are therefore more exposed to cost-cutting. This was evident in the models showcased by Renault at the event, including the all-electric Dacia Spring and the Mobilize Limo, which are both Chinese-manufactured.
Schmidt Automotive Research predicts that almost every new fourth model fitted with a plug will be sold in Western Europe this year. As a result, European OEMs are cutting corners to reach CO2 compliance targets while offering a product that can still be sold at a relatively affordable price point after local subsidies.
Logistical challenges in shipping from Shanghai to Europe could pose a challenge for Tesla and potentially lead to increased competition for European volume OEMs.
French President Emanuel Macron published a hard-hitting interview on the morning of the event, setting the narrative for the show. During his tour of the event, Mr. Macron walked past the BYD stand without taking a glance, possibly avoiding the Chinese stand.
Mainly French OEMs should be concerned going forward, with a worried-looking Renault CEO seen in deep discussions with Macron. Chinese manufacturers, however, are making significant strides in the European market, with exterior styling near or on par with European manufacturers.
It is worth noting that the all-electric Sino-vehicles showcased at the event had a high-quality feel, making some of the incumbents' new offerings appear less impressive by comparison.
German OEMs are better positioned to absorb costs and push them onto consumers as they move to more electrified models. Rotating interior screens and other features in Chinese models do not close the gap to German premium manufacturers.
Chinese manufacturers like BYD and Great Wall Motors showcased their European products in prime positions at the Paris Motor Show to establish a strong brand presence and highlight their commitment to the European market. Meanwhile, French manufacturers like Renault displayed Chinese-made models such as the all-electric Dacia Spring and Mobilize Limo to emphasize global production partnerships and focus on specific segments.
The potential limits to Sino-manufacturers' growth in Europe may be in the premium segments, with the exception of Polestar. However, with the increasing number of Chinese-manufactured vehicles entering West European roads, it is clear that the Chinese auto industry is making a significant impact on the European market. The Paris Motor Show served as a testament to this growing influence.
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