On October 7, as the whistle sounded for the departure of the Nansha Automobile port in Guangzhou, the ro-Ro ship "Chang Shenghong" carried more than 1,900 export commodity vehicles to the Middle East. On October 6, GAC Aeon officially launched its new pure electric model AIONYPlus at a press conference held in Doha, Qatar. Recently, Weilai, Changan, Star Road, Xiaopeng, BYD, polar Krypton and other Chinese brand cars have also landed in a variety of ways or are actively preparing to land in the Middle East market.

 

The latest data from the General Administration of Customs shows that in the first half of 2024, China's passenger car exports to the Middle East reached 42.0 million units, an increase of 46.2% year-on-year, becoming the largest export destination for Chinese cars in the first half of the year. Moreover, new energy vehicles accounted for 19.6% of them. No one expected that the Middle East, where "the head of a cloth is the richest in the world," unexpectedly became a new hot place for Chinese automobile exports.

 

Car companies are pouring into the Middle East

 

"Chinese car companies are either already in the Middle East or on their way to the Middle East..." The phrase circulating on the Internet is not necessarily accurate, but the rush of Chinese car companies to the Middle East market has become a new landscape.

 

Overall, the pace of Chinese brands moving to the Middle East is accelerating. Data show that in the first half of this year, China's car imports in Israel alone reached 13,000, far more than the 11,000 Japanese cars and 8,500 European cars, becoming Israel's largest supplier of imported cars.

 

It is understood that in October this batch of new cars exported from Guangzhou Nansha automobile port to the Middle East are mainly new energy vehicles, and GAC 'an at the press conference in Doha, not only officially launched the new energy model AIONYPlus, but also announced that it will further expand the electrification product lineup, and accelerate the new energy models such as Haobaobao HT, Haobaobao GT and Haobaobao SSR in the Middle East.

 

On October 4, NIO signed a strategic cooperation agreement with strategic investor CYVN, announcing that it will establish an advanced technology research and development center in ABU Dhabi, UAE, and will jointly develop a new model for the local market with CYVN, and will also establish a joint venture with CYVN, NIO Middle East and North Africa Company, which will first carry out business in the UAE in the fourth quarter of this year.

 

On August 31, the Middle East and Africa conference of Changan Automobile brand was held in Riyadh, Saudi Arabia, launching the three brands of Changan, Deep Blue and Avita, and introducing the future product launch plan.

 

In June, Xiaopeng Motor announced the sale of two products, Xiaopeng G9 and Xiaopeng P7, for the Egyptian market. In March, BYD held a product conference in Dubai, the United Arab Emirates, announcing that its Seal, Song PLUS and Qin PLUS three models were officially launched into the UAE market. In January, Starway sponsored the Dubai International Marathon, greatly increasing its visibility in the Middle East. Last year, Krypton signed an agreement with Israel Union Group to launch Krypton 001 and Krypton X locally.

 

"The Middle East is undoubtedly a market with great potential and prospects for Chinese brands that are accelerating their 'going to sea'." Zhang Xiang, secretary-general of the International Intelligent Transport Technology Association, said in an interview with China Automotive News that the Middle East became the largest export destination for Chinese cars in the first half of the year, which not only shows the ability of Chinese brand cars to adapt to the local market environment, but also the rapid growth in sales, and highlights the continuous strengthening of Chinese brand cars.

 

Why is the product selling so well

 

Against the backdrop of multiple barriers to Chinese electric vehicle exports in Europe and the United States, the sales performance of Chinese-branded vehicles in the Middle East market is particularly encouraging.

 

"The realistic environment and policy support of Middle Eastern countries bring new opportunities for Chinese cars." Zeng Xin, a professor at the University of Science and Technology Beijing, told China Automotive News that on the one hand, major countries in the Middle East have a high gross domestic product (GDP), which is three times the world average, because of their oil production and many "rich people". As the largest economy in the Middle East, Saudi Arabia occupies more than half of the six Gulf countries in terms of land area, population size and economic aggregate, and oil export is the pillar industry of its economy. Due to the high income of residents, the vast area, the hot climate and other factors, the demand for automobiles in the region continues to grow, becoming a fierce competition market for major global auto brands. In the past, the Middle East auto market was mainly dominated by Japanese and Korean brands, especially Japanese brands at one time accounted for more than 50% of the market share, with Toyota and Hyundai being the representatives of the sales leaders. However, with the addition of Chinese brands in recent years, this market landscape is changing. On the other hand, after decades of development, the overall strength of Chinese automobiles has been significantly improved, especially in the field of new energy vehicles, and its technical level has been among the top in the world. Especially for Middle Eastern consumers, the popularization of advanced configurations such as intelligent and autonomous driving has opened up a new situation for the sales of Chinese-branded cars in the Middle East market.

 

Zhang Xiang pointed out that car companies are increasingly focusing on research and development and product optimization for specific markets, which provides strong support for the sales growth of Chinese-branded cars in the Middle East. He analyzed that in view of the natural environmental characteristics of the Middle East, such as long sunshine, hot and dry climate, and widespread deserts, as well as the actual situation of low gasoline prices and right-rudder vehicles, Chinese brand cars have made corresponding adjustments when exporting to the region. These adjustments are not only reflected in the model and power performance to better meet the local demand for off-road vehicles, but also in the overall design, emphasis is also considered to reduce the sunroof configuration, the use of woven or sweat absorbent seat materials, and equipped with a larger capacity of the car refrigerator. In recent years, whether it is traditional fuel vehicles or new energy vehicles, the products exported to the Middle East are mainly high-end models, and the current sales data reflect the actual results of product adaptation.

 

Yao Chunde, a professor and doctoral supervisor of Tianjin University, pointed out in an interview that the popularity of new energy vehicles in the Middle East is closely related to the policy support of the local government. Although there are many oil exporting countries in the Middle East, these countries have actively followed the global trend of green development in recent years, accelerating the transition to green energy and supporting the development of the new energy vehicle industry. Since there is almost no local traditional automobile industry in the Middle East, cars mainly rely on imports or local production by foreign brands, which creates favorable conditions for the development of new energy vehicles.

 

The IEA report highlights that the promotion of electric vehicles has become a key strategy for Middle Eastern countries to advance their green transition. In the process of green transition, the UAE became the first country in the Middle East to commit to net zero emissions by 2050 and implemented a series of preferential policies, including free registration of electric vehicles, free parking, and reduced charging and passing fees, with the goal of having electric vehicles on the road by 50% by 2050. Saudi Arabia has also proposed tax breaks and subsidies for the development of electric vehicles in its Vision 2030. Egypt has launched an Electric Vehicle Development Plan, while the government of Qatar has set a goal of 10% pure electric vehicle penetration by 2030. These initiatives provide a broad market opportunity for Chinese vehicles, including electric vehicles, to enter the Middle East market.

 

New energy vehicles have become a bright spot

 

New energy vehicles, which accounted for 19.6% of China's auto exports to the Middle East in the first half of the year, are becoming a new business card for Chinese brand cars in the Middle East.

 

Research by global consultancy Alixpartners found that more than 70% of Saudi consumers said they would consider buying an electric vehicle for their next car. 93% of consumers who plan to buy an electric car know of at least one Chinese brand. Saeed Barsami, chairman of the National Automotive Committee of the Saudi Chamber of Commerce and Industry, believes that nearly 40 percent of Saudis now prefer Chinese brands. The shift has been driven in large part by aggressive marketing strategies, including heavy spending on marketing and after-sales services.

 

"Special research shows that at present, in the export products of Chinese brand cars to the Middle East, mainly in the direct export mode of domestic car companies according to the order supply, there are also some parallel export methods of agents." Zhang Xiang said that in addition to the layout of many car companies in the Middle East market, through self-construction or cooperation with local dealers to build 4S stores, parallel import methods are mainly for some new energy hot models, but parallel import methods currently exist low agent profits, delivery time is difficult to guarantee, and local after-sales service is difficult. Therefore, the vast majority of local consumers still buy cars from the official channels of car companies.

 

In recent years, Chinese-branded new energy vehicles are increasingly appearing on the roads of the Middle East. Byd has entered the Middle East market since 2023, and its products have entered the United Arab Emirates, Saudi Arabia, Jordan, Qatar, Israel and other countries. In May 2024, BYD officially opened its first store in Riyadh, the capital of Saudi Arabia. In June 2024, BYD completed its 1,000th delivery in the UAE. In 2023, Chinese electric vehicles will account for about 61% of the Israeli electric vehicle market share. In the first half of 2024, the market share increased to 68.31%, and BYD became the local sales champion brand, of which the ATTO3 was the best-selling model in Israel in the first half of this year with 7,265 units sold. In July, BYD signed an agreement with the Turkish government to invest $1 billion to build a plant in Turkey that will produce 150,000 electric vehicles a year and set up a research and development center. The plant is expected to be operational by the end of 2026 and will provide 5,000 jobs.

 

In March 2024, Geely's new energy brand Polkrypton 001 and Polkrypton X electric vehicles opened sales in the United Arab Emirates and Saudi Arabia. In Jordan, Egypt and other countries, Chinese brand electric car sales are also growing.

 

Rhodium Consulting Group released a research report that believes that in 2024, China's overseas investment in electric vehicles will remain strong, and the Middle East and North Africa will jump to second place. "There are many advantages for Chinese brand cars, especially new energy vehicles, to explore the Middle East market." Zeng Xin believes that the Middle East is located at the junction of the three continents of Asia, Europe and Africa, and some countries enjoy tariff-free access to the European and North American markets, and Chinese electric vehicles can be used here as an important export base, radiating Europe, Africa and other broader markets. At the same time, from a global perspective, the Middle East is an automobile market with huge potential, and seizing the opportunity to actively expand the Middle East market is of great significance for Chinese automobile companies to "go to sea".

 

China Automotive News, October 12, 2024