Study reveals concentration and regional distribution of automotive production in China

Peter Nagel, economist and managing partner of ANP, the company that conducted the study, and Bi Lei, head of the ANP analysis team in China, commented on the results as follows:

"[The] analysis clearly shows the complexity and dynamics of the Chinese automotive market. The massive overcapacities, coupled with the strong regional concentration, pose enormous challenges for the industry. At the same time, however, they also offer opportunities for global expansion and technological innovation. We are observing that Chinese manufacturers are increasingly using these capacities to expand their presence on international markets and invest in future technologies. The coming years will be decisive for the reorganization of the global automotive industry, and China will play a key role in this."

Key messages of the analysis:

• Concentration of production: The top 15 OEMs in China operate 60 percent (102 out of 171) of all automotive plants, indicating significant market concentration.
• Regional distribution: The eastern provinces of Guangdong, Jiangsu and Zhejiang dominate the production landscape with 32.5 percent of all plants.
• Capacity distribution: The average production capacity is 173,620 units per plant, with a median of 150,000 units. 
• Market leader in transition: While traditional manufacturers lead the list of production facilities, electric vehicle manufacturers are gaining ground. In a direct comparison, the Chinese car manufacturer BYD was able to overtake the world's largest US electric vehicle manufacturer to date. 
• Correlation: There is a strong positive correlation (0.89) between the number of factories and the total production capacity of a manufacturer.

These findings underline the dynamic development and increasing maturity of the Chinese automotive industry. They show clear patterns in industrial concentration and regional distribution, which are of great importance for investors, suppliers and competitors.

Current market developments and challenges:

• Export boom: Chinese car manufacturers have increased their exports to almost 5 million vehicles in 2023. This will help to partially compensate for the existing overcapacity.
• Price war: Intense competition and existing overcapacity have led to an aggressive price war for NEV/BEVs. Several manufacturers have significantly reduced their prices in China.
• Consolidation: It is undisputed that the market will go through an intensive phase of consolidation. Smaller and less efficient car manufacturers are particularly at risk in this market environment.
• Technological change: The rapid development in areas such as autonomous driving, connectivity and new energy drives requires continuous investment in research and development as well as the modernization of production facilities.
• Global expansion: Chinese manufacturers are increasingly pushing into international markets, particularly Europe and Southeast Asia. This could lead to tensions with established global car manufacturers.