Chinese EV brands earn increasing recognition: McKinsey

(ENCS) -- Chinese consumers have long been willing to pay a higher premium for international brands, but this trend is changing in the Chinese automobile market.

A new report released by Global Management Consulting Corporation McKinsey on Tuesday said that the high premium advantage of international vehicle companies is gradually disappearing.

"Consumer recognition for electric vehicles and Chinese brands is increasing," said Bill Peng, a partner in McKinsey's Hong Kong office.

Forecasts from McKinsey show that in the 10 years from 2021 to 2030, total global passenger car sales are expected to hit about 800 million units, of which electric vehicles are expected to reach about 220 million units. The Chinese market may contribute nearly 50 percent of electric vehicle sales, with the sales volume of electric vehicles within 10 years about 100 million units.

In the context of the transformation of fuel vehicles to smart electric vehicles, McKinsey conducted a 2023 Chinese car consumer survey. It found that in recent years, new manufacturers have continued to pour into the Chinese automobile market, and traditional automobile manufacturers have also launched new brands. In the past three years, 15 new brands have entered the Chinese market, and 12 old brands have withdrawn from the market, according to the report.

The recognition of Chinese brands in the field of electric vehicles is much higher than its recognition in the field of fuel vehicles, the report said. There are four Chinese electric vehicle companies on the top five list of brand recognition; but in the field of fuel vehicles, Chinese car companies have missed the top five.

In terms of brand premium payment willingness, there is a tradition that Chinese consumers are willing to pay more for international brands than local brands. But the advantage of international brands is gradually disappearing: nearly half of the respondents said that they are no longer willing to pay premiums for international brands.

Peng believes that compared with fuel vehicle consumers, the importance of vehicle brands to electric vehicle consumers is weaker. But in the long run, with the increasing maturity of electric vehicle technology, a trustworthy brand image is essential to the success of electric vehicle companies. Chinese car companies must further strengthen the establishment of their brand image to facilitate long-term company development.