Why are the Chinese buying fewer cars?

How China is restarting the economy : "The desire for new cars is unbroken"

Mr. Jiang, did you beat the virus?
There can be no talk of a victory yet. We are still struggling with the import of infections from abroad, and here and there the infections flare up again in the country. But in the not-too-distant future, hopefully, the epidemic will be over.

Shenyang is undergoing a profound structural change like the one in the Ruhr area. The auto industry shrank by over nine percent in 2019, then came the corona crisis. How do you get out of there?
Yes, it was a very difficult trial, and Shenyang has had a tough time, as people in other parts of the world are now. But all large industrial companies have now resumed work and production, and the situation is getting better every day. The auto industry started production again on February 17th. On March 14th the first train left Shenyang for Enns in Austria. But the consequences of the crisis still weigh heavily on us.

How are medium-sized companies doing?
That is what we are most concerned about right now. Medium-sized companies are an important part of our supply chains. You are more prone to such crises. We have developed a rescue plan and are doing our best. However, it takes a little longer than the large companies.

What is the most important thing?
We are implementing new guidelines. These include tax cuts, preferential interest rates, employment aid and stimulating consumption. All of this lowers the financing and operating costs of small and medium-sized companies. After all, the supply chains have to work again.

Why do you think the problems in China's auto industry are temporary?
Technological progress in the direction of e-cars and autonomous driving will soon take hold. The market is clearing up. Some companies are now being forced to rebuild. Others go bankrupt. The support measures are also effective. Two weeks after the ramp-up, BMW celebrated an anniversary: ​​three million BMWs have been produced in China to date. We are proud of that. And on April 1, the construction of a new BMW plant began as planned, which clearly shows how great the trust is in the Chinese market and in the Shenyang location.

Even before the crisis, fewer cars were being bought.
This has to do with short-term economic fluctuations and the switch to the electric car. In such a profound process, people wait and see. In the medium term, however, the desire for more consumption and a new car remains unbroken. It is the first car in the country and a better one in the city.

But it doesn't look like that at the moment.
Still, we are confident because we have this huge market. In 2018, there were an average of 172 cars per 1,000 people in China. The world average, on the other hand, is 380. In Germany it is 611. In the USA it is even more than 800. There is still room for improvement in China and the corona crisis is only a small cut in this development. At the same time, the central government is promoting the electric car industry.

Why do you trust national governance more than free competition?
You need both side by side. The state must first push new developments such as electromobility in a coordinated manner. Otherwise it won't work. For example, it has to promote the development of the battery industry or charging stations, but also the purchase of e-cars. Only later do market forces take hold. In the next three to five years, the Chinese auto industry will change at a pace never before.

Isn't that a distortion of competition?
No, because we are increasing the competitive pressure at the same time. For example, we are opening up the car market to international manufacturers. BMW was the first foreign manufacturer in China to receive approval to increase its joint venture share to 75 percent.

Can China with its 1.4 billion people cope with 600 to 800 cars for every 1000 inhabitants?
The number is too high. The Chinese auto density will settle somewhere between 400 and 500 vehicles. But this still takes time. The central government expects a density of 260 vehicles by 2025.

What does the new car look like then?
The new car is electric, intelligent, networked and shared. With e-cars in China, we are rapidly advancing to new levels of innovation. In the areas of batteries, the electric motor and, above all, in the motor control. I think the electric car will bring dramatic changes to our everyday lives. Autonomous, intelligent driving will very soon become part of everyday life in China. And everything will be networked with one another.

And how quickly will you get this mobility turnaround?
We mainly rely on 5G. The 5G network enables us to advance autonomous driving. We already have test regions where we are trying out 5G for cars. But we can also use 5G to control factories and connect production to the supply chains. Intelligent production will revolutionize car production. And we're at the forefront.

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