Driving Change: How Chinese Cars are Reshaping the Automotive Landscape - an interview with Tarek Ammar in Al Anbaa

In recent years, car prices have increased for several reasons, but this has not affected the new car market in Kuwait. On the contrary, this market is still achieving good growth, with sales estimated at 110,000 new cars registered in 2022, which is an indicator of the good economic situation in the country and evidence of the purchasing power of citizens and residents alike.

This is how Tarek Ammar, General Manager of ARA Research & Consultancy, begins his talk about the automotive market, based on the Car Brand Image (CBI) study of the automotive sector in Kuwait, which ARA has been conducting for nearly 20 years, in order to monitor the expected changes and transformations in this sector, to provide dealers and car companies in the Arab region with information and studies that help them know the desires and trends of consumers, and thus to provide them with the best offers.

As part of his work to monitor the transformations in this vast and important market in Kuwait, Ammar points out that the trends of local customers are linked to the global situation, and stops at what he calls “the great shift in automotive technology represented by the accelerated shift towards the manufacture of more environmental friendly cars, specifically electric, and the accompanying enactment of international laws and regulations that encourage the ownership of this type of car and limit the production of cars powered by an internal combustion engine.”

“This reality will affect the buyers mindset, which is already starting to think (closer to reality) about the possibility of owning an environmentally friendly car over the next 10 years as it will become an inevitable reality,” he said.

But Ammar pointed out at the same time that "the global transition towards sustainable mobility will be a major challenge for car dealers in Kuwait, as the infrastructure is not yet ready to receive electric cars, in addition to the lack of laws that encourage buyers to own environmentally friendly cars: The prevailing thought among some that the futility of buying electric cars in a country with gasoline prices is still the cheapest compared to neighboring countries, and these factors will hinder or delay the transition towards sustainable mobility."

Chinese Cars… Intelligent Competitor

 «During the past years, the Chinese automotive industry has been able to infiltrate the Kuwaiti market quietly through a huge number of brands, and a wide range of categories that include hatchbacks, sedans of different sizes, multi-purpose vehicles, minivans, and wanes, to capture an influential market share, up to 20% by the end of 2023, and this percentage means that it has surpassed the Korean and European cars, and entered a direct challenge with major makes», starting from this approach based on facts and clear figures, to indicate that «the Chinese manufacturer has become a key player, and even a smart competitor, who was able to penetrate the Kuwaiti market steadily».

Earlier this month, the largest Chinese car exhibition was held at Kuwait Finance House (KFH) Automotive Hall in Al-Dajeej area in Al-Farwaniya Governorate, the first Chinese car festival under one roof organized by Kuwait Finance House, featuring more than 13 brands that presented more than 147 different cars that meet the various desires and needs of customers and suit all segments.

“Most of the customers of Chinese cars are Kuwaiti citizens with good and high incomes, many are Kuwaiti women, along with the category of young people and young families, and there is also a growing segment of residents who want to buy a new economic car with a stylish design suitable for daily use, and this is what Chinese cars are providing today, with stylish and distinctive modern designs and cabins rich in equipment and features that match the specifications of luxury cars and provide comfort and tranquility when driving, along with technology, entertainment, communication, navigation, and safety systems, as for the performance it is well suited to the city's streets”. Ammar said.

Alongside all of this, Ammar pauses at "after-sales services, maintenance and long warranty, some of which extend for ten years and more, in addition to the pledge of some agents to buy back at a good price, all of these factors made these cars desirable to a wide segment of buyers, and boosted confidence about the reliability of Chinese cars despite the newness of its era, and helped them to acquire a good market share in a relatively short period."

Thoughtful Development

The General Manager of “ARA” indicates that “The development of the Chinese automotive industry is accelerating, and this is what we observed during 2022, the development was remarkable, both in terms of design and technology or even the promotion of brands, and the most characteristic of this industry is that it is moving according to long-term plans and strategies.”

Ammar starts from "the Corona pandemic and the accompanying semiconductor crisis and supply chains that made many European, American and Japanese factories stand helpless," and the difference between them and the Chinese car industry, which he says "went confidently to showrooms around the world without stopping or delay, and the reason here is China's correct planning and far-sightedness, today it acquires many primary ore mines around the world, and was able to achieve self-sufficiency in semiconductors."

He adds that "It has worked to strengthen its domestic chip industry for many years, becoming a priority and a necessary need, especially after the tensions with the United States, in addition to the pursuit of many Chinese groups to acquire industrial groups in the automotive sector, including the acquisition of Volvo by Geely and SAIC Motors by the British MG, in addition to Chinese investments in leading international companies and the aim is to benefit, develop and refine the industry to be a competitor in global markets."

Made in China

“Made in China” is no longer the scary sentence that stands in the way of the consumer, says Ammar, adding, "The buyer today has become more aware, especially the younger generation is completely different from previous generations, Chinese cars are evolving and have exceeded European safety tests, especially with the improvement of quality over the past decade, and the Chinese government continues to provide absolute support to Chinese automakers and even encourages them to acquire other foreign industrial groups, which is in favour of the development of the Chinese industry."

A report by Bloomberg last November stated that “Chinese companies involved in the manufacture of clean cars have acquired a share of 5% of the global market, and Beijing must seize the opportunity for the decline in the manufacture of electric cars in Europe by reserving more space for its brands and overcoming the high cost of battery-based models to increase the volume of sales of locally manufactured cars.”

Ammar says: “There is no doubt that the auto industry in China will remain in permanent development, and this is what the numbers show and the expansion of the volume of production and the customer base, which opens the question about what competitor automakers around the world, in Asia, Europe and America will do in the coming years? And what will the competition look like and its impact on the future of this industry?

For original Arabic Interview, click here.