In 1907, some very, very optimistic Europeans — including an Italian Prince, a French racing driver, and a conman or two – gathered in the French Embassy in Beijing to start their long journey across the Gobi, into Mongolia, across the vastness of Russia into Europe and finally down to Paris. Bandits, wolves, angry locals and petrol thieves all added to their problems, as well as cars that were, to say the least, not always totally reliable.

But The Race to the Future is not just about a car race, it’s about a changing world, from one we wouldn’t recognise to one we most certainly do. And it’s about China’s introduction to that now long ubiquitous invention of the modern age – the combustion engine. Paul French caught up with the book’s author Kassia St Clair to talk cars, China and modernity…but not to give away who won the race!

First of all, the race itself. Who had the idea, what were the rules and why on earth start in Peking of all places where cars were virtually unknown and roads basic to say the least in 1907?

The idea came from the Parisian newspaper Le Matin, possibly in collaboration with the owner of the De Dion Bouton car brand, who was brilliant at marketing his vehicles and always keen to make a splash. It was organised in a hurry, and the planning phase was short and a bit chaotic. The result was that there were few concrete rules, and because these shifted over time, drivers were unsure about them. For example, they didn’t really know how long they were expected to stick together as a team and where and when it went from ‘group endeavour’ to ‘race’. The route was something of a classic: it had been done by other writers previously on horseback or using the train. People of that time liked the alliteration and the idea that they were travelling from the ‘capital’ or ‘heart’ of the East to that of the West.

Who were the competitors, and did any car brands we might still recognise today take part?

The competitors were a mixed bunch. The best-known was an Italian prince from the Borghese family. This was one of the most prestigious families in Italy: the Borghese gardens in Rome are named after them, and one ancestor had been a pope. Car enthusiasts, particularly those interested in the early days, would recognise the De Dion-Bouton name; this was one of the best-known car brands of this time (a 1907 De Dion-Bouton car is featured in the lead image of this article). The Itala was also very prestigious; it was an Itala vehicle that was used to open the Brooklands track that same year. The others – the Contal and the Spyker – were more obscure.

Had anyone in China actually seen a car yet in 1907?

Yes! Although the journalists and the drivers flattered their readers back home in France, Britain and Italy by suggesting that theirs were the very first vehicles in China, we know that wasn’t the case. Articles about car parades and letters complaining about reckless drivers in Shanghai and other large cities were being sent to newspapers in the years before the race. We also know that Empress Dowager Cixi owned an early American Duryea vehicle.

So many new technologies were in play during the race, new technologies China was to both occasionally fear and sometimes embrace wholeheartedly. How did race updates get back to Europe and America from China?

This race was as much about the telegraph system as it was about the automobile. The route selected was the one that cleaved to the telegraph wires, so that journalists could send articles back as often as possible, and reports and updates were reprinted all over the world, from Hawaii to Tasmania. By the time the cars had reached western Russia, people knew exactly who the racers were and were often lining the roads to greet them because they’d been reading reports of their progress.

I’m frankly amazed the cars didn’t fall apart ten minutes outside Beijing – no expressways or Ring Roads then! But also there was no infrastructure to support cars – how did they get spare parts, and more importantly, petrol?

So, not all the cars survived the journey, and it also wouldn’t be true to claim that the cars drove the whole way. In lots of places, particularly in the mountain passes to the north of Beijing, they had to be physically dragged by pack animals and teams of people. The motorists carried a lot of spare parts with them, but fuel and oil had to be transported separately and left in caches along the route. In Russia and Europe, this was done largely by train and horse and cart, but in China and Mongolia, fuel and oil were transported by camel and mule.

The cars, the telegraphs… it must have all seemed incredibly modern to the often anti-modern Qing Dynasty (on its way out, but still in power). What did the Chinese government take away, if anything, from this display of modernity in the imperial city?

The Qing Dynasty leaders were deeply suspicious of the entire affair; lots of the motorists had some army experience, and the Chinese officials seemed to have feared that the automobiles were being used to scope out the territory. While the journalists and diplomats protested loudly and vigorously that these suspicions were groundless, we do know that the military applications of the automobile were being seriously considered. For example, a Russian government official explicitly linked the success of the Peking to Paris race to the possible use of cars in warfare. Ultimately, however, the Qing dynasty was unable to resist the pressure from foreign diplomats to allow the race to continue, and the idea of motorcars rushing across China became a really strong symbol of Western power and modernity in the accounts written by contemporaries. It was also obvious that China was a lucrative potential market: one of the entrants actually returned to China not long after the race to open a motorcar concession.

The post A new book examines a quirky 1907 Peking to Paris car race appeared first on Focus - China Britain Business Council.

Over the last few decades, China has become a global automotive giant. This remarkable growth has been paralleled by the development of a solid car dealership model, initially centred around the ‘4S system’ – an acronym for ‘sales, service, spare parts and surveys’. However, as the Chinese market reaches a new level of maturity and consumer preferences undergo a seismic shift, the once unshakable dealership model is undergoing a profound transformation, redefining the way cars are sold and serviced.

For decades, the 4S dealership model formed the bedrock of China’s automotive retail industry. This system proved immensely lucrative for dealerships. The appeal of a one-stop-shop experience, where customers could seamlessly transition from purchasing a vehicle to making sure it was running smoothly, significantly contributed to the popularity and financial success of 4S dealerships.

“As private car ownership continues to grow in China, the way in which cars are sold to the customer is undergoing change,” says David Gregory, China Market Business Advisor, CBBC. “In some cases, we are now seeing examples of car manufacturers striving to develop a more direct relationship with their customers rather than relying solely on the 4S dealership routes to market.”

The momentum is shifting away from new car sales as the second-hand car market gains unprecedented traction. A multitude of factors play into this transformation – a burgeoning middle class now prioritises cost-efficiency, a heightened consciousness towards sustainability impacts purchasing choices, and the quality of used vehicles has notably improved. Moreover, economic uncertainties and evolving consumer priorities have led prospective buyers to explore alternatives, with the second-hand market offering a compelling option.

The shifting dynamics of China’s automotive landscape have prompted industry leaders to explore unconventional avenues for vehicle sales. Alibaba’s car vending machines stand out as a prime example. These machines, offering test drives to potential buyers with strong credit scores, deliver an engaging and memorable experience while harnessing technology to streamline the sales process. However, Alibaba is not alone in this quest for innovation.

Jaguar Land Rover (JLR) has introduced a direct-to-customer sales approach, bypassing traditional dealerships in certain cases. Through their online platform, customers can configure, purchase, and even finance their vehicles without ever setting foot in a physical showroom. This approach caters to a digital-savvy consumer base while simplifying the purchasing process.

BMW, on the other hand, has embraced augmented reality (AR) and virtual reality (VR) technologies. Prospective buyers can now use their smartphones or VR headsets to explore detailed virtual showrooms, inspect vehicles inside and out, and even take virtual test drives. This innovative approach not only enhances the customer experience but also caters to the rising demand for digital engagement.

To attract a broader customer base and counter the challenges of slowing new car sales, many dealerships have started offering flexible financing options and long-term payment plans. These initiatives aim to ease the financial burden of purchasing a new vehicle and make it more accessible to a wider range of consumers. By breaking down the total cost of the vehicle into manageable monthly payments, dealerships are enticing individuals who might have previously been deterred by the upfront costs.

The evolution of China’s car dealership model is emblematic of the country’s ongoing transformation on multiple fronts – from economic development to consumer preferences and environmental sustainability. As the market continues to evolve, industry players must remain adaptive and inventive, responding to changing trends and seizing novel opportunities. The convergence of technology, changing consumer behaviours and a commitment to environmental consciousness is redefining the way vehicles are bought, sold and serviced in the world’s largest automotive market.

14 September: CBBC Auto Roundtable event in collaboration with the Institute of the Motor Industry

The next CBBC Automotive Roundtable of 2023 will be hosted by the Institute of the Motor Industry at its conference centre on 14 September.

This roundtable will focus on how the industry is tackling new automotive technology and the skills gap, with speakers including Steve Scofield FIMI, Head of Business Development, Institute of the Motor Industry; Owen Edwards, Head of Downstream Automotive Consulting, Grant Thornton; Andy Turbefield, Head of Quality at Halfords Autocentres; and David Gregory, China Market Business Advisor, CBBC.

After the presentations from the Institute of the Motor Industry, Grant Thornton and Halfords, there will be a Q&A session, where you’ll get the chance to put your questions directly to the industry experts. The event will conclude with a networking buffet lunch.

Click here to register.

The post Is China’s car dealership model changing? appeared first on Focus - China Britain Business Council.

Over the last few decades, the rise of the middle class, rapid urbanisation, and robust economic growth have all contributed to a surge in car ownership in China. As the world’s largest automotive market, China currently represents nearly one-third of all global car sales. Moreover, the country’s domestic car production is continuing to expand, attracting both international and domestic automotive brands and driving the demand for car parts.

“China’s average car age is low; currently at around 5 years old. To give a comparison, in the UK the average is around 10 years old. As the cars in China age, the requirement for spare parts, for general maintenance and repair will also increase, in line with this growth,” says David Gregory, China Market Business Advisor, CBBC.

Although the landscape is promising, significant challenges need to be addressed to fully unlock the potential for growth in China’s car parts market. The most formidable challenge is the extensive fragmentation that characterises the sector. The market is saturated with independent service outlets, ranging from small-scale neighbourhood repair shops to larger, specialised service centres, all catering to a diverse range of customer needs. This fragmentation poses a substantial barrier for international businesses aiming to establish a significant presence in the market.

China’s car service centres are rapidly adopting new technologies to enhance their offerings. Advanced diagnostic tools, electronic vehicle health monitoring systems, and even AI-powered predictive maintenance are becoming increasingly prevalent. These technologies enable service centres to provide more accurate and efficient repairs, thus improving customer satisfaction.

A number of car companies are at the forefront of embracing these technologies in their service centres. Notable international players such as Tesla and BMW are leveraging AI and connectivity to offer remote diagnostics and software updates. Homegrown brands like Nio are also incorporating advanced technologies to enhance customer experience and optimise vehicle performance.

The car repair sector in China is also witnessing a transformation in terms of required skills. As new technologies become integral to the industry, the demand for technicians skilled in diagnosing and repairing advanced electronic systems is growing. Additionally, expertise in handling electric vehicles (EVs) is becoming crucial, given the rapid adoption of EVs in China. This demand for specialised skills presents both a challenge and an opportunity for the industry.

However, certain skills are still lacking within the sector. A shortage of technicians proficient in handling cutting-edge technologies remains a concern. Bridging this skill gap will be crucial for the industry’s sustainable growth – and could present an opportunity for UK skills providers like the Institute of the Motor Industry. “[Certification for technicians and fitters can] contribute to a more skilled and knowledgeable workforce in the parts and service industry and can be seen as an important aspect of welfare for China/UK parts distributors and enterprises,” says Herbert Lonsdale, Global Skills Ambassador for the Institute of the Motor Industry.

There are promising prospects all around for UK businesses in China’s car service sector. “The UK continues to be associated with high-quality manufacturing and engineering expertise. This reputation can give UK parts providers a competitive advantage in the Chinese market, where discerning consumers’ value premium products,” says Lonsdale. “British-made parts can command a premium price and attract customers seeking reliable and well-engineered components. China is also actively investing in research and development, aiming to become a global leader in technological innovation. There are opportunities for UK parts providers to collaborate with Chinese counterparts to leverage their advanced manufacturing technologies and enhance their product offerings”.

As the average age of vehicles on Chinese roads increases, the demand for servicing and repairs is set to soar. This presents a significant growth opportunity for businesses in the servicing sector. Independent service centres that can provide specialised maintenance and repairs tailored to the evolving needs of ageing vehicles are poised for success.

A noteworthy trend in China’s car parts market is the rise of one-stop service centres. These comprehensive service hubs offer a range of solutions, including repairs, maintenance, and access to spare parts – all conveniently located under one roof. This trend aligns with the preferences of modern consumers for integrated services, opening a unique avenue for businesses to position themselves as holistic service providers.

China’s burgeoning second-hand car market presents yet another promising opportunity for the car parts sector. As more consumers opt for used cars, the demand for spare parts to maintain and repair these vehicles is expected to surge. This shift creates an ideal environment for businesses to offer cost-effective and reliable solutions to cater to the growing number of second-hand car owners.

14 September: CBBC Auto Roundtable event in collaboration with the Institute of the Motor Industry

The next CBBC Automotive Roundtable of 2023 will be hosted by the Institute of the Motor Industry at its conference centre on 14 September.

This roundtable will focus on how the industry is tackling new automotive technology and the skills gap, with speakers including Steve Scofield FIMI, Head of Business Development, Institute of the Motor Industry; Owen Edwards, Head of Downstream Automotive Consulting, Grant Thornton; Andy Turbefield, Head of Quality at Halfords Autocentres; and David Gregory, China Market Business Advisor, CBBC.

After the presentations from the Institute of the Motor Industry, Grant Thornton and Halfords, there will be a Q&A session, where you’ll get the chance to put your questions directly to the industry experts. The event will conclude with a networking buffet lunch.

Click here to register.

The post How big is China’s market for car parts? appeared first on Focus - China Britain Business Council.

The global automotive landscape has witnessed dramatic changes over the past few decades, and nowhere is this more evident than in China. The country’s unprecedented economic growth has not only transformed its urban landscape but also revolutionised how its citizens engage with mobility. This transformation has set the stage for a vibrant second-hand car market that is growing at an astonishing pace.

China’s second-hand car market is characterised by a remarkably low average age of vehicles. This phenomenon can be directly attributed to the swift economic progress the nation has witnessed. To put this into perspective, back in 2000, there were a mere 4 million vehicles on Chinese roads. Fast forward to 2023, and this number has ballooned to an astounding 320 million. This exponential growth in private vehicle ownership has naturally contributed to a dynamic second-hand car market.

The vitality of China’s second-hand car market is further demonstrated by its impressive economic figures. The market is estimated to be worth RMB 400 billion (£44 billion), and the China Association of Automobile Manufacturers estimates that the annual value of the market will reach RMB 750 billion RMB (£81 billion) by 2028. This figure underscores the market’s significant economic impact and its indispensable role within the broader automotive industry.

“With such a young market for private car ownership, the second-hand car market in China is really at the very early stage of its development,” says David Gregory, China Market Business Advisor, CBBC. “As this sector of the market matures, it will not just effect the pure retail side of the automotive business, but also create ever greater opportunities in other areas such as spare parts and maintenance.”

Prominent brands such as Geely, Chery and BYD have already begun to establish dedicated divisions for selling certified pre-owned vehicles. Such a move not only allows these companies to tap into a burgeoning market, but also to capitalise on their well-established brand reputation and quality assurance practices. This approach is highly attractive to buyers seeking reliable used cars.

In tandem with this surge in interest, the digital era has brought about transformative changes to how consumers engage with the second-hand car market in China. An array of online platforms have emerged, facilitating the seamless purchase of second-hand cars. Websites like Guazi.com, Uxin and Renrenche have developed a reputation as trustworthy platforms where potential buyers can explore an extensive range of options and make informed decisions.

The impact of these online platforms goes beyond just providing consumers with more options. They have also introduced a new level of transparency to the market by providing comprehensive information about a vehicle’s history, condition and price. These platforms can also offer supplementary services such as rigorous inspections, certifications and flexible financing options, which, when combined together, render the buying process much smoother and more convenient for buyers.

The main factor driving the growth of the second-hand car market remains cost efficiency. The cost of new cars in China can be surprisingly high due to associated taxes and additional expenses. Acquiring a second-hand car presents a viable avenue for young buyers to own a vehicle at a fraction of the cost of a new one. That being said, the allure of the second-hand car market in China does extend beyond economic motivations. Young people in particular are exhibiting a growing inclination towards exploring this option due to environmental concerns, as a second-hand car may represent a more sustainable option than buying a new car.

Moreover, many young buyers are actively seeking out used electric vehicles (EVs). This stems from the fact that used EVs tend to be more affordable than their new counterparts due to government subsidies, aligning with both economic considerations and environmental concerns. This move also provides young buyers with access to cutting-edge technology at a substantially lower cost.

Automakers, recognising this potential, are strategically venturing into the sector. Nevertheless, there are many key factors that need to be taken into account if the market is to succeed long term, as Owen Edwards, Head of Downstream Automotive Consulting at Grant Thornton, emphasises: “Any used vehicle market requires fully structured processes for sourcing, storing and refurbishing, moving vehicles to the sales point and then selling the vehicle. Without efficient processes in place, growth in the used car market could slow over time as vehicle stocks increase and costs rise,” he says. “Moreover, as used car and vehicle financing markets mature, Chinese original equipment manufacturers (OEMs) should consider selling parts into the used car market. As China’s vehicle finance market develops, it will create opportunities to upsell used car finance and, in order to capture this potential market, OEMs will need to move early.”

Moreover, the increasing preference for second-hand cars among young buyers, driven by cost-efficiency and environmental considerations, adds an intriguing dimension to an evolving landscape, as does the ways online platforms are changing how buyers engage with the market. As China’s second-hand car market continues to develop, it will not only present economic opportunities, but also align with the shifting priorities of the country’s dynamic population.

14 September: CBBC Auto Roundtable event in collaboration with the Institute of the Motor Industry

The next CBBC Automotive Roundtable of 2023 will be hosted by the Institute of the Motor Industry at its conference centre on 14 September.

This roundtable will include a focus on how the industry is tackling new automotive technology and the skills gap, with speakers including Steve Scofield FIMI, Head of Business Development, Institute of the Motor Industry; Owen Edwards, Head of Downstream Automotive Consulting, Grant Thornton; Andy Turbefield, Head of Quality at Halfords Autocentres; and David Gregory, China Market Business Advisor, CBBC.

After the presentations from the Institute of the Motor Industry, Grant Thornton and Halfords, there will be a Q&A session, where you’ll get the chance to put your questions directly to the industry experts. The event will conclude with a networking buffet lunch.

Click here to register.

The post China’s surging second-hand car market appeared first on Focus - China Britain Business Council.

China is the world’s top automotive market, with 25.8 million new vehicles sold in 2019 versus 17 million in the United States. Private car ownership in China stood at 207 million in 2019 compared to just 3.7 million in 2000, the year that China entered the World Trade Organisation. In the same period, private car ownership per 1,000 capita surged from just 3 to 148. Although these increases have been substantial, there is still huge potential in China’s car industry, since the ownership rate is still comparatively low compared to the US or countries in Europe.

From the perspective of UK original equipment manufacturers (OEMs), China continues to be the main international growth driver. For example, China is the largest market for Jaguar Land Rover, which sold 146,399 cars in the country in 2017 – more than was sold in the whole European Union market. China will continue to be a growth engine for UK brands, and tier two and three UK suppliers should be aware of China’s growth areas to ensure they’re aligned and bringing value within the wider supply chain in order to be part of the overall growth story.

China has targeted developments in specific parts of the automotive sector as a key part of its industrial strategy, Made in China 2025. This includes new energy vehicles (NEVs) and intelligent and connected vehicles. To tap into China’s auto market, UK companies can make use of major local industry events as first-step market entry opportunities.

Brands can attend auto-related exhibitions, trade shows or forums to showcase their products and pitch to potential Chinese clients. For example, China EV100 Forum 2021, which was held on 15 January this year, is a major online forum in the NEV sector. More than 200 VIP guests joined the next-generation vehicle event, including those from governments, associations, research institutes and companies. As automakers and supply chain manufacturers aspire to produce better quality vehicles and components, Testing Expo China 2021 in September 2021 is another event to be considered. Automechanika Shanghai will also take place in November 2021.

Click here to read the report in full

The post Report: China’s automotive industry appeared first on Focus - China Britain Business Council.