What you need to know about working with Chinese new entrants

What you need to know about working with Chinese new entrants

Did you know China overtook Japan to become the world’s largest auto exporter in 2023? And the leading Chinese brand, BYD, overtook Tesla as the world’s top seller of EVs with over 3 million sales for the year?

In a recent webinar, our Keyloop expert panel explored the challenges and opportunities presented by Chinese OEMs entering the global market. The expert panel included Jacqui Barker, Jules Grinnell, Nina Chen and Graham Stokes. 

The following areas provided much debate.  

New entrants threaten traditional models

In a constricted global economy, where the average consumer has less disposable income, new entrants are unlikely to increase the total volume of vehicles sold. Instead, they will challenge the OEMs already operating in the space.

The traditional retail model is under threat as the industry undergoes a profound change. We’re seeing a massive reduction in retailers across every market as OEMs decide how they want to operate with fewer partners in bigger spaces. It’s clear that many are unsure of their next move as some OEMs attempt to transition to a direct-to-consumer sales model, while others have abandoned this idea after realising the consequences of removing retailers from the equation.

With the global landscape looking so uncertain, Chinese new entrants may need to consider adopting new models in order to thrive.

Challenges and opportunities

Chinese OEMs enter new markets with quality products at competitive prices, and many control their entire supply chain, making them valuable partners in retailers’ eyes – especially in the UK, where supply chain issues have plagued the industry since the pandemic.

However, Chinese OEMs won’t dominate on price tag alone. They must work on creating an emotional connection to their brand to win consumers’ hearts and minds and remain relevant.

New entrants require efficient workflows and connections to a global retail network to achieve their ambitious growth and expansion plans. And, like every other brand competing in this new automotive era, they must deliver an exceptional customer experience, both online and in person.

Many Chinese OEMs see aftersales as their prime issue, specifically servicing vehicles and warranty claims. However, after speaking with retailers in our network who manage these vehicles, we found that the most pressing issue was vehicle stock data. They seek clarity around vehicle inventory and delivery times.

In this blog, you’ll see how Keyloop is uniquely equipped to help new entrants overcome these challenges. But first, let’s look at some of the biggest brands entering Europe.

Four key players

Dozens of Chinese OEMs are set to enter Europe, but let’s focus on four key players: Chery, BYD, NIO and Xpeng.

Chery

Founded in 1997, Chery is China’s highest-ranked domestic brand, followed by GEELY and GAC. It’s been the number one exporter of Chinese brand passenger vehicles for 21 consecutive years. Chery sold 1.88 million cars last year, half of which were exported, totalling $42.25 billion in revenue.

Chery is already well established in the South African, Middle Eastern and South American markets and its set to arrive in Europe this year. Its already signed 55 UK retailers, over half of whom are Keyloop customers.

BYD

Short for Build Your Dreams, BYD is now the world’s leading electric vehicle company, having outperformed Tesla last year. They sold over 3 million units in 2023, totalling an astonishing $82.09 billion in revenue.

BYD started as a battery maker in 2003 before transitioning to an OEM in 2008. Their battery-making expertise played to their advantage when they entered the EV market.

One of BYD’s significant advantages is that it fully controls its entire EV industrial chain, from mining raw materials to electric motors, controls, and chips. Its impressively holistic product portfolio includes passenger cars, coaches, industrial vehicles, trucks… and even ships. They use their ships to export their cars.

BYD came to Europe in 2021. The first market it chose to enter was the Nordics due to their new energy adoption policy and reputation for new technology uptake.

NIO

Specialising in designing and manufacturing electric vehicles, NIO developed innovative battery-swapping stations as an alternative to conventional charging stations.

The brand’s new concept showrooms, known as NIO Houses, contain a library, a lounge area, a cafeteria and a workspace. NIO Houses revolutionise the customer experience by enabling customers to make the brand a bigger part of their lives. There are currently four NIO Houses in Europe.

NIO’s biggest challenge is creating the infrastructure to support its battery-swapping technology. There are only dozens of battery-swapping stations spread across Europe – not enough to make the brand a viable competitor.

Despite selling 160,038 units last year, totalling $7.833 billion in revenue, financial challenges delayed NIO’s go-to-market plan. However, in December 2023, investment company CYVN injected US$2.2 billion in equity funding into NIO, which has put them back in the game, making them one to watch in 2024.

Xpeng

Xpeng’s name translates to “little big bird”, which perfectly describes this innovative brand. Having only been founded in 2015, Xpeng’s rate of growth is remarkable. The company sold 141,601 units last year, achieving a total revenue of $3.22 billion -and are publicly listed on the New York and Hong Kong stock exchanges.

Xpeng also has the support of some big investors, namely Alibaba, Qatar Investment Authority (QIA), and Abu Dhabi sovereign wealth fund Mubadala. And last year, Volkswagen invested $700 million in Xpeng to jointly develop Neighbourhood Electric Vehicles for China using their software platform.

Xpeng operates at the leading edge of innovation in autonomous driving, rivalling Tesla in ADAS and SMART drive. It also has a dedicated robotics department and created the world’s first flying car, which will be in the pre-order stage this year.

Xpeng entered Norway in 2021, then expanded to the Netherlands, Sweden and Denmark in 2022. They have their sights set on Germany and France this year.

Where are they entering?

Chinese OEMS are expanding aggressively into international markets, especially Europe.

The Netherlands is a top choice for establishing their European headquarters – the country’s convenient port access and EU membership make it an appealing location. Plus, most people speak English fluently, giving them a common language in which to communicate.The Nordics are another entry market of choice thanks to high-tech adoption and good EV uptake. The UK is also popular due to its rich automotive history and English-speaking population. However, Britain’s departure from the EU and its right-hand drive makes it less attractive than other locations.

What makes Keyloop the perfect tech partner for Chinese new entrants?

In addition to the unique challenges Chinese OEMs face, they must also ensure they offer an outstanding customer experience, from the first touchpoint to the last. That’s the key to a competitive advantage in today’s marketplace — and that’s precisely what Keyloop can help them deliver.

Our Experience-First platform streamlines workflows across the entire customer lifecycle, elevating operational agility and human performance. Plus, data-driven insight coupled with a continuous 360° consumer view lets you shape every interaction to customers’ preferences, transforming each touchpoint into a memorable exchange that cultivates enduring loyalty.

Keyloop is uniquely positioned to connect Chinese OEMs to all the players in the brand ecosystem – retailers, importers and consumers. We can leverage our existing retailer customers to engage new entrants and help them grow.

We can also integrate Chinese leads into the Keyloop platform so dealers can connect as they do with other brands. Plus, our suite of workshop solutions streamlines aftersales processes and enables efficient warranty claims, which will help new entrants overcome their biggest challenges.

Leveraging Keyloop’s API platform to integrate with non-Keyloop customers and third-party suppliers allows us to pass data to retailers to use as vehicle inventory. This solves Chinese OEM’s stock data issue, eliminating double keying and guesswork around delivery times.

Keyloop’s extensive retailer consumer base makes us an appealing partner for new entrants. Because retailers use Keyloop systems to manage their business, we can help OEMs build an integrated experience around the key touchpoints of new vehicle sales and warranties being processed by the retailers. And that means we are perfectly equipped to help Chinese OEMs overcome their biggest challenges so they can flourish now and in the future.

Start a conversation with one of our panelists: