OEMs’ mobility strategy: EU vs CN

OEMs are all exploring the mobility space, regardless whether they’re Chinese, American or European. But there seems to be a slightly different approach between what the Chinese are doing versus, say, the Europeans.


Here’s what, only in the last couple of months, hit the news:

  • FAW, Dongfeng and Changan form a ridehailing joint venture with Alibaba and Tencent
  • GAC forms a ridehailing joint venture with Tencent and Guangzhou Public Transport
  • UCAR (which is partially owned by Alibaba) owner buys Borgward
  • Geely and Daimler form a ridehailing company together

Two things are remarkable; firstly, ride-hailing is the go-to mobility mode that OEMs prefer investing in. Not surprising, as the market size of ride-hailing exceeds well over USD 30 billion in China; in comparison, the US ride-hailing market, the world’s second, is worth USD 12 billion. Didi monopolizes the Chinese market (80%), but as shown above, will be facing some well-funded competition in the upcoming years. Didi is also struggling from governmental push-back and a bad reputation on social media since the regretted death of 2 Didi Hitch users in 2018.

A second item worth noting is the collaborative spirit of Chinese OEMs. The Chinese prefer working in partnerships rather than on their own. Obviously, depending on the political climate, these collaborations can be international or local. Lately, there’s more appetite for local initiatives, partially as a reaction to the hostile climate with the US, but also due to China’s strategy to become less dependent on foreign investments.

The Europeans

The German and French manufacturers, on the other hand, are much more exploring car-centric models. Car2Go, Daimler’s successful car sharing offering for instance, is such an example: a Daimler owned fleet of Smarts, made available to the public. The model makes sense, as car sharing providers could become the OEMs’ largest clients, so why not create your own customer?

The trend in Europe is reinforced by the strategy of the powerful leasing companies, who are doing essentially the same thing: maximising the utilisation rate of their short term rental fleet. Proposing a small car for the week and a bigger car for weekends and holidays, is an example of this strategy.

Which is the right approach?

The transition from ownership to usership is becoming a trend across the world, but is much stronger in Asian countries than it is in the Western world. Sharing economy and on-demand services are not new in countries like China where, for example, food, groceries and services were always ordered and delivered, rather than purchased in a store.

Europeans have owned cars for over 50 years, Americans even longer, resulting in very high car ownership ratio (roughly 0.8 cars per head in the US, 0.5 cars per head in Europe). Car ownership in China is still below 0.1 cars per head and although many people have a driver’s license, only few of them will actually own a car due, amongst other reasons, to China’s restrictions on license plates.

Therefore, car sharing models could make more sense in Europe whereas ride-hailing services seem to be more appropriate in China. Having said this, it does look like China’s model is more future-proof than the EU/US models: alongside ride services, China is also investing in mass transport modes (mainly trains), alternative powertrains (electric and hydrogen), lightweight materials and digital payments. We can conclude that the world’s second largest economy has 2 advantages compared to Europe: it doesn’t have to change the mindset of consumers, who already prefer usership and on-demand, and it benefits from the speed of a plan-economy. The European OEMs still need to change consumer behaviour and need to do so mainly by themselves.

Authored by: Yves Helven