Hardships Turn to Sweetness! Chinese Automakers' Globalization Enters Harvest Period, Overseas Business Becomes New Driver

On September 1st, over a dozen mainstream domestic automakers successively announced their August sales reports. Judging from the data and the focus of each automaker's sales posters, a clear signal is emerging: the overseas market is upgrading from a former second battlefield to a main battlefield. Chinese automakers' global layout has finally turned from hardships to sweetness, entering a new phase of new-round "qualitative change".

Break out of the zero-sum game, overseas carries the banner of growth

Looking at sales data, in August, the signs of Chinese automakers breaking out of the domestic market's "zero-sum game" are becoming increasingly obvious.

Among them, Chery, known as the "Chinese Automaker Export Champion", stands out the most.

In August, Chery Group's total sales reached 280,000 vehicles, while the overseas market contributed 197,000 vehicles, a year-on-year increase of 52.1%. The export ratio once again exceeded 70%, meaning for every 10 cars sold, 7 were sold overseas. As of August, Chery's cumulative exports have exceeded 7 million vehicles, making it the first Chinese automaker to reach this milestone.

BYD's overseas sales are closing in on Chery. In August, BYD's total volume reached 440,000, making it the only automaker with monthly sales exceeding 400,000. The growth of the overseas market is the biggest driver. BYD's August overseas sales reached 188,700, a surge of 134.6% year-on-year, setting a new historical high for the brand's single-month overseas sales. In comparison, two years ago, BYD's overseas monthly sales basically hovered around just over 30,000 units.

Similar to BYD, Geely Automobile also created a new historical record again. In August, Geely Automobile's total sales were 270,000, with 110,000 overseas, a surge of 205% year-on-year. This is already Geely breaking through 100,000 for three consecutive months. Among these 110,000 units, new energy exports exceeded 70,000, quadrupling year-on-year, reaching 64% of the overseas exports.

Thanks to creating achievements in the overseas market repeatedly this year, Geely had previously adjusted its full-year overseas sales target from 640,000 to 920,000, and will strive for 1,000,000.

Except for the aforementioned automakers, SAIC Motor's August overseas sales reached 139,000, a year-on-year increase of 57.67%, accounting for nearly 40% of total sales. Changan Automobile's August overseas delivery was 92,400, a year-on-year increase of 78.6%, with overseas markets achieving year-on-year growth for seven consecutive months. Great Wall Motor's August overseas sales exceeded 60,000, a year-on-year increase of 38.42%, accounting for 55.1%...

Against the backdrop of increasingly fierce "zero-sum game" in the domestic market and increasingly weak terminal consumption, "export-driven" growth is becoming the most significant and commendable sales feature and highlight for mainstream automakers.

New Grip on Performance, System Layout "Hardships Turn to Sweetness"

More than sales figures, it is the performance that fills Chinese mainstream automakers with the fighting spirit of "setting sail overseas".

If sales are just the process, then performance is the result. The first-half financial report performance of multiple mainstream automakers has shown a historical reversal of revenue structure. Among them, BYD's overseas revenue exceeded domestic revenue for the first time in the first half of the year, with 181.268 billion yuan of overseas revenue accounting for 52.57% of the group's total revenue.

That is to say, the money BYD earned in the first half of the year came more from the overseas market. It is worth noting that although the overseas market failed to completely offset the domestic decline, due to higher pricing in the overseas market and relatively more stable prices, the higher profit space directly promoted the increase in BYD's net profit and gross margin.

Currently, with the continuous release of local overseas capacity and the continuous improvement of the channel system, BYD's overseas market is in a period of significant growth. That is to say, overseas will further become the key grip for BYD's performance growth.

Of course, driven by the combined high profits and scale growth in the overseas market, BYD is not the only one whose performance structure underwent a historical turn. Great Wall Motor's total revenue exceeded 100 billion in the first half of the year for the first time, with overseas market revenue accounting for 55.13% of total revenue, reaching 56.288 billion yuan. This is also the first time overseas revenue exceeded domestic revenue.

Regarding Chery, total revenue in the first half of the year was 143.28 billion yuan, with overseas revenue of 98.968 billion yuan, a year-on-year increase of 51.0%, accounting for a high 69.07% of total revenue. This ratio ranks first among mainstream Chinese automakers, and thanks to the high gross margin of overseas sales, Chery's overall gross margin in the first half of the year also saw an increase, with a net profit margin of 6.3% in the first half of the year.

Changan Automobile's revenue in the first half of the year was 65.634 billion yuan, with overseas revenue of 21.942 billion yuan, a year-on-year increase of 78.77%, with the proportion of total revenue rising to 33.43%, while overseas gross margin remained above 20%. Geely Automobile directly stated in the financial report meeting that the two core driving factors for performance growth in the first half of the year were premiumization and globalization.

Regarding new forces, Leapmotor's operating revenue in the first half of the year reached 38.11 billion yuan, of which the European market contributed 8.875 billion yuan... These data and cases continuously prove: the overseas market is not only a "second growth curve" for Chinese automakers, but also a substantial "performance engine". When scale expansion resonates with high gross margin, going overseas undoubtedly becomes a "must-answer question".

Gold Digging in Overseas Markets, But Challenges Remain

From the data, it is very clear that the overseas market is not only becoming a "hedging instrument" to counter the domestic downward cycle, but is also becoming a gold mine for Chinese automakers.

And this round of gold digging is not just about selling products out. The globalization of mainstream automakers such as Chery, BYD, Geely, Changan, and Great Wall has moved from the 1.0 era to the new stage of system overseas and ecological overseas of the 2.0 era. BYD factories in Thailand, Brazil, Hungary, and other places have been put into production successively; Geely accelerates the promotion of overseas localization projects such as Brazil and Spain; Chery plans to establish more than 10 production bases globally by 2025; Changan plans to expand Thailand factory capacity to 200,000 units...

These overseas factories are becoming the accelerator for Chinese automakers to impact global goals.

Of particular note, in this wave of going overseas, the proportion of new energy is getting higher. BYD exceeds 180,000 units, Geely's new energy export ratio reached 64%, Chery's new energy exports in August approached 40,000 units... And in terms of intelligence, XPeng Motors officially announced in August that it is advancing the global deployment of the second-generation VLA, planning to deliver the second-generation VLA to overseas users successively in the first half of next year.

Under the global wave of electrification transformation, the first-mover advantage of Chinese automakers in new energy and intelligence dimensions also determines that this round of going overseas for Chinese automakers not only has a first-mover advantage but also possesses sustainability.

The outlook is clear, but challenges also accompany it. The net profits of multiple automakers declined in the first half of the year, all mentioning exchange rate gains and losses. That is to say, when the proportion of overseas business changes from "supplement" to "half the landscape", exchange rate fluctuations are no longer an irrelevant detail in financial reports, but a systemic variable that directly affects the actual value of hundreds of billions in revenue.

The risk of exchange rate fluctuations also, to some extent, increases the uncertainty of automakers "gold digging". Besides exchange rate fluctuations, the huge investment in localization construction, financial expenses such as overseas brand building and marketing, will also bring considerable pressure to automakers' financial performance. How to build a stable and healthy input-output ratio will obviously become an inevitable thought for Chinese automakers in the globalization process.

Red Dot Observation:

Of course, no matter what, the data of August and the financial reports of the first half of the year point to a conclusion together: Chinese automakers are entering the "harvest period" of global layout. And within this harvest period, Chinese automakers are proving to the global market with a collective posture that Chinese automobiles have the strength and confidence to compete in the global market.