Chinese automotive brand JAC begins selling its T9 ute in New Zealand in a week or so, by which time China will have displaced Japan for the second year running as the world’s largest exporter of motor vehicles.
JAC joins the dozen or so Chinese carmakers already here … more are on the way. One, Xpeng, already with its name down on NZ Government books as an electric vehicle (EV) supplier, has built a flying car, essentially a two-seater drone.
The new model from JAC is a 4WD double-cab ute, chockerblock with electronic safety and internet-access stuff. There’s leather upholstery, a 360-deg camera and wireless phone charger, too.
The one-model T9 is priced to muscle in on the one-tonne tradies’ segment at $NZ49,990, a price helped along by Chinese State subsidies. A 2.0-litre turbo-diesel engine developing 125kW/410Nm and mated to an eight-speed ZF transmission provides the get-go.
Not surprisingly, the distributors here have tagged it the ‘JAC of all trades’. Towing capacity is three tonne (500kg short of segment leaders), payload is one tonne.
JAC is a State-owned company that began making light/medium trucks in the city of Hefei in 1964. Hefei is a bustling hub about 450km inland from coastal Shanghai.
These days JAC builds a mix of trucks and passenger vehicles, in partnership with the likes of Germany’s Volkswagen.
Volkswagen owns 50% of JAC’s parent company and helped it set up a research and development centre in Turin, Italy, in 2005.
According to data in the free trade agreement with China, New Zealand imported $NZ715.5 million worth of new vehicles from China in 2023. China that year produced a record 30.16 million vehicles: 26m cars and 4m commercials.
Of those, 16.2%, or 4.91m – 4.14m passenger cars and 770,000 commercials – were shipped overseas. That was a 58% increase over 2022, a boost that helped China overtake Japan as the No.1 exporter.
While 2024 numbers are not yet known, industry analysts expect China to have shipped more than 5.5m vehicles in 2024. Financial news agency Bloomberg expects more, around 6m.
At the end of last June, China had exported 2.793m vehicles, up 31% from the same period a year earlier, according to Chinese agencies. Japan’s vehicle exports over the first six months of 2024 were 2.0177m, down 0.3%.
Back in 1989, when a State crackdown on pro-democracy demonstrators in Beijing’s Tiananmen Square ended in hundreds of deaths, China’s motoring industry was a relative pipsqueak. It built all of 510,000 vehicles, most of them light/medium trucks.
That same year Japan produced 13 million vehicles, among them celebrated models like the Honda NSX, Mazda MX-5, Nissan 300ZX, and Lexus LS400.
Japan’s economy burst a few bubbles in 1989 but domestic car sales nevertheless went through the roof – 7.25m. Exports totalled 5.9m. Japan’s share of world gross domestic product (GDP) in 1989 was 17.8%. America’s was 26.5%. China’s was 1.8%.
Today, China’s world share of GDP is around 18% – without putting too fine a point on it, that’s growth of 900% in 35 years. Never mind that financial agencies in the West say China regularly distorts domestic production figures. Or that the State subsidises its automotive industry up the wazoo. China is now ahead in GDP of No.3 Japan and behind No.1 the USA, still around 26%.
Going into the 1990s China began to accelerate development of its automotive industry, helped by joint ventures with companies like America’s General Motors and Germany’s Volkswagen. The agreements allowed the Chinese to get access to US and European technology. More recently, Tesla licenced its technology in China.
These days demand in China for fossil fuel cars from GM and VW is falling. EVs from both carmakers can’t compete in price with those from China, which can be up to 30% cheaper. Nor can they compete in quality, say critics.
GM lost around $NZ700m in the nine months to October last year and has since written down by around $NZ9 billion the value of what was once described by US business agencies as a ‘jewel in its portfolio’.
China is the largest automotive market in the world, its growth fuelled by State subsidies estimated by US analysts at around $NZ670 billion over the past decade.
The result is staggering production capacity that has overwhelmed legacy carmakers (those who have dominated the industry since its inception), certainly in the past decade as the transition to EVs picked up pace.
China’s global share of EVs is estimated at 76%. It also pretty much controls the supply chain of rare earths for its EV batteries.
Roughly half the vehicles China is producing are EVs or plug-in hybrids. Demand for the other half, which run on fossil fuels, is declining as the State pushes the take-up of EVs. It’s compulsory, for instance, for China’s government agencies and businesses to use EVs.
Result is over production, with huge numbers of petrol and diesel vehicles parked up and sitting idle. Those carmakers who haven’t cut back on numbers or closed down are shipping the surplus vehicles overseas and selling them at steep discounts.
There are those in New Zealand’s motoring circles asking: ‘When will enough Chinese brands be enough Chinese brands in one of the smallest new vehicle markets in the world?’
New Zealand buyers of passenger vehicles remain wedded to Japanese and South Korean marques. The Ford Ranger – built in Thailand – has been leading the ute sector for years. BMW was the luxury No.1 last year.
Ex-British badge MG and Great Wall Motors were the only made-in-China brands among the Motor Industry Association’s top 15 passenger and light commercial nameplates in 2024. The MG ZS was the only Chinese model among the top 15 best sellers.
But industry executives agree that existing and emerging brands from China will one day disrupt the pecking order of those carmakers’ names that have rolled off our tongues for decades.
Investment bank UBS last year forecast that by 2030 Chinese carmakers will have a 33% share of the global market, while legacy manufacturers will drop from their current 81% share to just 48%.
The UBS forecast came not long before Japan’s Nissan, Honda, and Mitsubishi talked about merging to better compete with a new generation of Chinese carmakers and rivals like Tesla. A decision is to be finalised in June.
Such a merger, say analysts, would consolidate Japan’s automotive industry into two camps: Nissan, Honda, Mitsubishi in one, and blue chip Toyota with its holdings in Subaru, Suzuki, and Mazda in the other.
Europe’s carmakers began agonising a few years ago over China’s growing infiltration and the threat it posed to the established order. The EU last year imposed tariffs of up 35% on Chinese vehicles. The tariffs remain in place for the next five years.
“Even if Europe also turns further towards protectionism, China’s combination of low costs, supply chain dominance and EV leadership means its companies will continue to make inroads elsewhere, particularly in growth markets like South-East Asia,” wrote Bloomberg.
America Euro-American parent company Stellantis was the first to circle the wagons. It brought together a who’s who of international brands: Peugeot, Citroen, DS Auto (from France), Fiat, Abarth, Alfa Romeo, Lancia, Maserati (from Italy), Opel, Vauxhall (from Germany), Jeep, Chrysler, Dodge (from the USA).
Analysts are asking which of these can survive. There has been talk that the Chinese might raid the Fiat larder. Where to for the German carmakers, Mercedes-Benz, BMW, and the Volkswagen Group?
Where to also for US carmakers, like founding member Ford? To help protect their home market President Biden imposed a 100% tariff on Chinese EVs. President-elect Trump is talking ‘Fortress America’ and further tariffs.
Already, China has retaliated to EU and US tariffs by moving to restrict exports of key EV technology used in electronics and batteries.
The latest measure on essential materials is part of efforts to “strengthen the management of technology imports and exports”, says China’s official Xinhua News Agency.