Kim Catechis, Head of Global Emerging Markets at Martin Currie, sees automotive trends in China as being significant to the world's car industry.
The global auto sector is in a state of flux. Technological change, government regulation and in particular, the move away from fossil fuels are at the centre of this story.
But, it is unwise to look at key trends such as electrification narrowly through the lens of developed markets.
China is the world’s biggest vehicle market – 2016 saw 28 million new registrations, more than the US, Canada and Mexico combined. It already eclipses key markets such as the US and Europe in terms of electric vehicle (EV) sales:
The growth path of newly registered EVs has been phenomenal – a rise of 381% between 2014 and 2016 – and, importantly, the government wants 20% of total sales to come from ‘new energy vehicles’ by 2025 which is very exciting stuff.
The potential is not lost on local businesses, including ones that fall outside the traditional autos category – IT giant Tencent’s purchase of a 5% stake in US trail blazer Tesla earlier in the year being a clear declaration of interest. Meanwhile, Chinese quality autos manufacturers like Brilliance Automotive are aggressively ramping up EV efforts. China may be leading the charge, but this is a secular theme that we expect to play out across emerging markets with significant opportunities following in its wake.