The emergence of new vehicles, especially those developed by Chinese makers, is seen to have a significant impact on the UAE’s car market when it comes to prices. There’s no arguing that Chinese brands have caught a lot of attention due to their high-quality, affordable options, and their market share gains are beginning to influence EV brands as well.

This blog looks into the history of the Chinese automotive market, from its humble beginnings to global market dominance, the current growth trends of Chinese brands, key factors driving growth, and the future trajectory of this ever-expanding industry.

History of China’s car market

China’s automotive sector remained largely underdeveloped for the first half of the 20th century, with the first Chinese car – the Dongfeng CA71 –first produced only in 1958. 

The advent of socialist reforms post-World War II put the industry on a path towards modest growth. However, the Chinese car market wouldn’t take off until the eighties when the then government agreed to welcome foreign investment. This decision had a positive impact on the overall economy, including the automotive industry, which saw the arrival of many foreign automakers in China.

Growth & Expansion

The Chinese car market witnessed robust growth and expansion in the nineties and the new millennium owing to many factors. The massive foreign investment provided extraordinary impetus for growth and expansion. The introduction of private car ownership turned out to be the best thing to happen to China’s automotive industry and it hasn’t looked back since.

Many European brands entered the Chinese car market around the same time. These makers introduced new technological advancements enabling access to global supply chains for Chinese car markers. This influx of resources and expertise propelled the Chinese automotive industry onto the international stage.

Government Support

The role of the Chinese government in reforming the automotive sector cannot be denied. Beijing came up with policies that, in turn, bolstered private vehicle ownership and sales. Moreover, aggressive reforms helped China emerge as a top car manufacturing market, attracting investments from veteran and new companies alike.

From German giant Volkswagen to Saudi Arabia’s Ministry of Investment, leading manufacturers and groups have invested billions of dollars in the Chinese car market. Examples include Volkswagen’s $700 million investment in XPeng Motors, Abu Dhabi-based CYVN Holdings’ $2.2 billion investment in Nio, and Saudi Arabia’s Ministry of Investment’s $5.6 billion investment in Human Horizons.

On top of that, the Chinese government has invested in local companies to create them as viable alternatives to global car brands. Brands like FAW, MG Motor, Chery, King Long, and SAIC come at affordable prices with solid features, cementing China’s place as a leading manufacturer of local and international car brands.

Current Growth Trends of Chinese Brands & Cars

Chinese car brands have witnessed exponential growth in terms of production and sales, both at home and abroad. The country accounts for more than 30% of worldwide car production, dwarfing the scale of production in the European Union or the United States and Japan combined.

China has retained its status as the world's largest automotive manufacturing country and automotive market since 2009. Projections indicate continued growth, with analysts predicting that China’s automotive production will cross 31 million vehicles in 2024.

However, China could very well surpass this figure, given the fact that it produced 2.41 million cars in January 2024 alone. Going by these numbers, the Chinese automotive industry could very well produce over 40 million vehicles by year-end.

Competitive Pricing and Value Proposition

China is continuing to fill the world’s appetite for affordable cars. Chinese cars are much cheaper compared to their foreign counterparts. This affordability has already democratized car ownership in China and enabled millions of consumers to affordably access modern transportation solutions. Chinese cars are now replicating the same strategy across the globe as well.

Most affordable Chinese cars in the UAE

The UAE has seen a tremendous increase in the availability of Chinese vehicles due to increased demand in recent years. Data from Carprices.ae shows a massive difference in the prices between Chinese and American hatchbacks. Similarly, Chinese hatchbacks are said to be almost 60% cheaper compared to German hatchbacks.

Chinese sedans offer competitive pricing, costing nearly 35% less on average than their American counterparts. The gap further widens for Chinese versus Japanese or Chinese versus German sedans. Finally, the average price of a Chinese SUV is 50.5% lower than that of an American SUV, and 82% lower than a German SUV.

Check out some of the most affordable Chinese hatchbacks and SUVs in the UAE below.

• Wulling Mini EV
• Renault Twizy
• Leap Motor T03
• Kaiyi X3
• JeTour X70
• MG ZS

Conclusion

China’s automotive industry has come a long way since its dormant years in the fifties. In 2023, Chinese car production made up 40% of global car sales. But only 5.22 million (of the total 30.16 million vehicles produced) were exported to other countries.

The current trend shows China’s commitment to increasing its car market share, not just in the UAE, but across the world. Chinese dominance in the automotive sphere serves as a brilliant case study of innovation, expansion, and reliance on local manpower.