China's Brand Automobiles Are Poised for a Breakthrough

On December 10, the 30 millionth Chinese brand vehicle from China Changan—the Avatr 12 four-laser version—rolled off the production line at the Avatr Intelligent Factory in Chongqing. This marks China Changan as the fastest company to achieve 30 million vehicles under a Chinese brand, adding new significance to China's transition from a major automobile producer to a powerful automotive nation.

The automobile industry is a global sector that highly values brand influence. Thanks to the forward-looking planning by the government and the vigorous innovation by enterprises, Chinese brand automobiles are showing a new atmosphere under the strong impetus of new energy vehicles. According to data released by the China Association of Automobile Manufacturers, in the first 11 months of this year, Chinese brand passenger cars sold a total of 18.978 million units, an increase of 19.4% year-on-year, accounting for 69.6% of the total passenger car sales, an increase of 4.6 percentage points compared to the same period last year, setting a new record.

The record high market share of Chinese passenger cars is driven by continuous improvements in product strength. In recent years, industry companies have increased investments and overcome a number of technical challenges, significantly enhancing the quality and performance of their products. For example, the average range of pure electric passenger vehicles is nearly 500 kilometers; the cost of battery cells has been greatly reduced, and their lifespan has continuously improved; charging rates have doubled; and the proportion of new passenger cars equipped with combined auxiliary driving functions (L2) has risen from 16.2% in 2020 to 64% in the first three quarters of this year. Today, purchasing smart connected new energy vehicles has become a new pursuit for many young people.

The issue is that as market competition becomes increasingly fierce, some leading car companies, in order to accelerate their market capture, occasionally launch significant price reductions, prompting peers to follow suit. This has led to an intensifying "involutional" vicious competition primarily in the form of price wars, resulting in increased industry revenue without increased profits.

"In a mud pit, there are hardly any winners in a fight." The competition in the automotive industry relies not only on product sales to establish dominance but also on brand value to win people's hearts. Currently, car manufacturers need to shift their development philosophy from competing on price to focusing on value, accelerating the upward ascent and breakthrough of their brands.

Strengthen technological innovation. Major transformations in the automotive industry are typically driven by technology. Since technology can disruptively change brand positioning, technological branding is crucial for enterprises. Take the Volkswagen brand as an example. In earlier years, Volkswagen's sales in China were not high, but when Volkswagen applied the "TSI (Turbocharged Stratified Injection) + DSG (Dual Clutch Transmission)" golden combination power technology to its products, sales rapidly increased, surpassing Japanese brands. In fact, Chinese car companies have already been at the forefront of global advancements in electrification and intelligent technology transformation. Enterprises should seize opportunities and enhance the research and development of key core technologies in areas such as power batteries, new chassis architectures, and intelligent driving, thereby enhancing brand strength through technological innovation.

Solidify quality and safety. Automobiles are durable consumer goods with complex usage scenarios and involve personal safety. Their quality and safety are not only the foundation of product strength but also the guarantee of brand strength. Automakers should shift their focus from piling up configurations to enhancing quality, strengthening quality management throughout the entire lifecycle, including R&D design, production manufacturing, procurement and supply, and marketing services. Particular attention should be paid to key performance indicators that affect brand quality reputation, such as reliability, durability, and safety. It is essential to focus on the quality that consumers can see and touch, as well as the quality that is not easily perceived by consumers. By providing robust product quality and warm service, automakers can better meet diverse market demands, enhance user experience, and earn long-term public trust.

Telling a good brand story. Currently, Chinese automobile brands have already taken the lead over international brands in "hard strengths" such as power batteries and intelligent driving systems. However, there are still significant shortcomings in "soft strengths" like brand history accumulation, cultural value transmission, and user experience design. Traditional high-end brands such as Mercedes-Benz, BMW, and Rolls-Royce can provide consumers with emotional value beyond the products themselves, thanks to their century-long heritage and rich brand stories. In contrast, most Chinese brands started in the mid-to-low-end market. To break through upwards, they need to tell a good brand story and demonstrate cultural confidence. Stories are easy to spread, and culture generates value. Car companies should deeply integrate Chinese culture into product design and brand narratives, continuously enhancing product and brand potential.

The ascent and breakthrough of Chinese automotive brands, on the surface, appears to be an upgrade of products and brands, but fundamentally, it signifies the transformation of the Chinese automotive industry from "scale leadership" to "value leadership." The deeper significance of this change goes far beyond the realm of commercial competition. It will alter the value chain structure of China's automotive industry and the competitive landscape of the global automotive market, driving the overall advancement of the value chain in China's manufacturing industry.

Of course, compared to the rapid improvement in product strength, the upward breakthrough of automotive brands is by no means a one-time achievement. It is important to note that most international mid-to-high-end automotive brands have accumulated and settled over several decades, or even over a century. According to market research institutions, a new entrant typically requires around 10 years of sustained investment to establish stable brand recognition and customer loyalty in the high-end automotive market. For Chinese brands to truly achieve upward breakthroughs, they must also have a clear understanding of the brand building cycle, which is a new rhythm that must be adapted to for brands accustomed to quick results.