Delayed by the pandemic, Chinese OEMs are now accelerating plans to re-enter the European market — after a failed attempt around 2017.
While it’s clear they’ve learned from experience and now approach with an attractive brand strategy adapted to the non-Chinese vehicle buyer, they still face historic biases — the ‘Made in China’ label still being perceived as synonymous with poor quality, and the state’s relative political isolation among them. For example, in a recent GfK study, we found consumers held a favorable view of a vehicle, but perceptions changed when the country of origin was known and factored in. We cover this topic extensively in our article Dragon on wheels: How Chinese car brands are disrupting the EV landscape.
Despite signs of rigorous strategic preparation, the road ahead for Chinese automakers is as challenging as it is promising. In theory, it can be done. Chinese OEMs have demonstrated recent, remarkable success in other categories, such as Small Domestic Appliances — where, in just under five years, they have come to dominate the robot vacuum cleaner segment.
Have Chinese car brands done enough to be successful the second time around? What about barriers that are outside their control? Rooted in findings surfaced by a study conducted with a representative sample of Belgian consumers, we delve into the nuanced dynamics that influence this ambitious plan’s success or failure, and its impact on the global industry.
Understanding past missteps and causes of possible failure
Chinese automakers’ initial entry into the European market experienced a significant number of setbacks. But what were the reasons for these challenges? Our study surfaced four key factors: cultural bias, misinformation, existing consumer loyalty to established brands, and after-sales service concerns.
Cultural bias
For years, the ‘Made in China’ label was perceived to imply compromised quality and affordability over luxury. This sentiment is proving hard to shake, especially in a product category as significant as automobiles, where 42% of surveyed consumers cited China as their least-preferred country of origin for their next vehicle. This is 25 percentage points more than the second-to-last choice, South Korea (17%).
However, not all consumers share the same views. Notably, younger people are more open toward Chinese brands; 18–29-year-olds cite China significantly less often as their least preferred country of origin.
Consumer reservations largely stem from broader perceptions about the country’s reputation, with 70% of surveyed consumers sharing at least one statement referencing these perceptions as a reason for avoiding their vehicles. This, and persisting negative connotations strongly associated with the ‘Made in China’ label are contaminating Chinese brands — assumed to be low quality, unreliable, and unsafe.
Misinformation
Consumers are generally uninformed, or misinformed, about Chinese car brands. While a small group of survey respondents (15%) associate Chinese brands with EVs, and cutting-edge technology, the majority of surveyed consumers:
- Confused Chinese vehicles with models from Japan, South Korea, and France
- Associated Chinese vehicles with low-quality (45%) and low prices (43%)
Meanwhile, only a minority:
- Considered Chinese vehicles technologically advanced (11%)
- Associated Chinese models as high quality, comfortable, and prestigious (2%)
Pervasive Sino-skepticism coupled with a lack of information seems to fuel consumer assumptions around Chinese vehicles that brands must work doubly hard to dispel. To succeed, consumers must be convinced of facts that are currently being outshined by the reputation of their home country: that they have 5-star safety ratings, are proven reliable, and offer comparable quality to established European brands. They also need to actively detach themselves from the perceived reputation of China as a nation-state.
Consumer loyalty
With its rich automobile legacy, Europe is home to generations of consumers who have grown up with loyalty to specific brands. Switching to an unfamiliar brand, especially when investing in an asset as valuable as a vehicle, becomes daunting for many
China’s perceived negative reputation, and the lingering consumer belief that Chinese products are of low quality, make it even less likely that European consumers will switch from their current brand to a new Chinese option. In fact, 51% of surveyed consumers shared there is no chance they will buy a Chinese vehicle in the future. However, the GfK 2023 Future of Mobility Report finds that consumer would consider switching brands if the new one offers more cutting-edge technology — creating a bright future for Chinese automakers who can change these perceptions about their vehicles.
Further, 70% also expressed loyalty to their dealership. Clearly, after-sales service and personalized relationships matter significantly — arguably more than the brands they represent. Here again, however, consumers are far from unanimous — with younger generations feeling significantly different about the relative importance of a relationship with their dealership.
Concerns about after-sales support
An underdeveloped dealership network — or the perception thereof — amplifies consumers’ uncertainty regarding the quality of after-sales service and presents a logistical challenge for Chinese new market entrants.
Our research suggests misinformation is rife around Chinese brands in general. For example, consumers often think their model options are more restricted than they actually are. Clearly, regardless of the actual state of their dealership and after-sales service network, Chinese brands must work on both the reality — establishing a tangible presence — and consumer perception — reassuring them it’s there.
Dealerships are the most used channel to collect information about a possible new vehicle — 54% of surveyed consumers citing it as their primary source. Additionally, 20% of respondents shared that a lack of dealerships stopped them from seriously considering Chinese brands.
Despite being at a disadvantage in terms of physical presence, being the world leader in EVs offers Chinese automakers a chance to bridge the gap. Other GfK research has shown that electric SUV buyers have the most digital vehicle purchase lifecycle of any segment, starting every step of their buyer journey online. This is also true for younger buyers who are both more comfortable with online engagement and less loyal to dealerships overall.
Leveraging opportunities to offer digitally-oriented services and support with these groups can help build a brand reputation for after-sales excellence while new Chinese entrants work to grow their dealership network.
Turning the tide — Factors contributing to success
There are also encouraging signs for Chinese new market entrants, with key factors propelling them towards potential success. These include learnings from other sectors, an increased alignment between design and consumer needs, affordable EV offerings, advanced tech integration, and strong safety ratings.
Learnings from other sectors
The rise of Chinese tech giants gives automakers a template for market entry and expansion. The rapid acceptance of Chinese brands in other sectors, such as social media platforms and Consumer Technology and Durables, hints at changing perceptions.
“Perhaps the most noticeable aspect of Chinese OEMs reentering the European market is that, apart from the deployment of these new brands, there remains a significant lack of transparency regarding the entry conditions they will encounter. The European Union has initiated a commission to examine the potential qualification for anti-competitive behavior, specifically aimed at Chinese manufacturers at this stage. Some countries are reviewing the eligibility criteria for environmental incentives, imposing penalties on EVs with high carbon emissions during transportation and the use of coal energy in their production processes – factors that could significantly impact Chinese-made cars. Despite this, Chinese brands possess advantages for market entry, such as well-crafted designs, battery expertise, and a wide range of possible pricing strategies. However, they also face regulatory hurdles and governance issues over which they have no control or visibility. From a market research perspective, this presents a complex challenge in predicting the future market dynamics.”
François Le Gunéhec, International Key Account Manager Automotive, GfK
Design and consumer need alignment
Recent models cater more diligently to European taste and requirements, showcasing a growing understanding of the local consumer. Our research finds Chinese vehicles described in very positive terms when consumers were unaware of their country of origin. Significantly, many even believed the vehicle to be German — a favored country of origin.
The prejudices that consumers seem to have about Chinese vehicles — that they are designed differently to European ones and don’t look good — disappear when evaluated under a blind test, where 85% of respondents mistook a Chinese model for a European, North American, Japanese, or South Korean one.
This reveals two key points. First, Chinese automakers are closely matching European design tastes — so well that people often can’t tell them apart from their favorite brands. Second, consumer opinions remain heavily influenced by concerns about China as a nation-state and outdated beliefs on manufacturing quality. These, more than an actual misalignment with consumer needs, are the main obstacles facing Chinese automakers.
The EV advantage
China’s leadership in EVs, particularly in providing affordable options with innovative solutions like replaceable batteries, positions them ahead of the game as eco-dedicated, but cash-strapped consumers move towards greener alternatives. While 47% of consumers cite electric, hybrid, or hybrid plug-ins as their preferred engine type for their next purchase — notably as company vehicles rather than private ones — 87% wouldn’t buy one.
Established brands lose a significant opportunity to convert the 1 in 4 consumers who have considered an EV purchase, mainly due to their high prices, and limited driving range. Chinese brands can make a significant impact in this segment, addressing the main barriers to purchase by offering cheaper EV models with replacement batteries that lessen the need for frequent charging points, extend driving range, and make charging more efficient.
“Casting a spotlight on the forthcoming EU probe into Chinese EV prices, we find ourselves on the cusp of a market reckoning. This investigation may well become the crucible that tests existing consumer perceptions of China, potentially tainting their image even more. Furthermore, it threatens to erode the primary pillar of Chinese brands – their affordability. How this unfolding narrative plays out holds the key to a shifting landscape where price, reputation, and global competition intertwine, reshaping the market’s very foundation.”
Bert Lijnen, Consultant Automotive & Mobility, Consumer & Marketing Intelligence, GfK
Technology integration
With state-of-the-art technology embedded in their vehicles, Chinese brands are visibly comfortable with (and experienced at) embracing the future — enhancing their image, user experience, and safety at the same time.
However, here again, the biggest obstacle they face in gaining market share is consumer perception — with only 11% believing Chinese vehicles are technologically advanced (compared to 34% for German vehicles, and 23% for Japanese vehicles). But word is getting out: a small group of survey respondents (approximately 15%) knew more about Chinese vehicles than average. This group readily associated them with EV offerings and cutting-edge technology, and also more readily and accurately recognized Chinese models in blinded tests.
Breaking the safety ceiling
Safety ratings are a hallmark of quality in the automotive sector, and critical to earning — and maintaining — consumer trust. Chinese brands often exceed expectations in this area, with a notable few even securing the coveted 5-star safety rating. These accomplishments challenge preconceptions about Chinese manufacturing quality and demonstrate a commitment to consumer well-being.
Once again, consumers’ negative sentiments can’t withstand blind testing. When assuming that a blinded promotional photo of a Chinese vehicle was a German one, 91% of respondents believed it was safe, and 88% believed it was reliable. For respondents who correctly identified the vehicle as Chinese this dropped to 73% and 68% respectively.
With advanced safety features being almost 9x more important than other considerations when buying a car, addressing consumer perceptions is critical to the success of Chinese brands. And perceptions are shifting. Already, despite negative views, only a small minority (13%) of surveyed consumers expect a decrease in market share for Chinese brands — and of the 44% who expect an increase, 20% attribute this success to their complying with European safety standards.
Navigating the future of Chinese automotive
The Chinese automotive industry is at an inflection point: at the brink of potentially reshaping the global market. As underscored by our study, brand success or failure depends on multifaceted and deeply interwoven perceptions and local market dynamics — their biggest obstacle is seemingly consumer prejudice and misinformation.
Affordability and technological innovation are clearly strong suits for Chinese automotive brands, particularly in the EV segment. But an undercurrent of skepticism remains — rooted in concerns over quality, safety standards, and post-sales support. How these brands navigate this nuanced landscape will dictate both whether they succeed or fail, and the shape of the automotive industry at large.
The fact that Chinese brands have demonstrated the capacity to learn from previous attempts at market entry, and the depth of change that their new strategy highlights, points to their best chance of success.
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