How do Asian manufacturers manage to cut prices?

Chinese cars are generally much cheaper than European ones. What is the reason for this phenomenon?

Until a few years ago, we hardly knew they existed. And to tell the truth, few of them ventured into the European market. We are obviously talking about Chinese cars, which were not really present here. Admittedly, some brands ventured to cross the world, with models that looked more like pale copies of models already marketed by traditional manufacturers. But since then, things have evolved and Asians are arriving in force on the Old Continent. Which, moreover, is not very pleasing to the European Unionwho wants to fight against this invasion.

There is one exception to the end of the sale of thermal vehicles in 2035 voted by the European Parliament: luxury cars (Ferrari, etc.). Of course, they are few, so emissions will be limited, but for the symbol and social justice, it will be necessary to iron pic.twitter.com/6gPS9lc6ZE

— Audrey Garric (@audreygarric) June 9, 2022

A weighty argument

We obviously think of MG, which is a hit with us with its MG4, but other brands also want to find a place for themselves, such as BYD or Nio. And all have a strong argument: the price. Indeed, it is known that Chinese cars often cost significantly less than their European counterparts. But what is the reason for this phenomenon? In fact, there are several, as explained by the firm specializing in automotive data, Jato. First of all, taxation in China and in Europe is not the same, which makes it possible to display a better price over there. But this is not the only explanation.

Labor

Indeed, if Chinese cars are also cheaper, it is because labor is less expensive in Asia. One thinks for example of the MG4, the price of which could be revised upwards if it were to be produced on the Old Continent. Moreover, we know that the Middle Kingdom relies on inexpensive products in order to flood the market, which therefore explains very easily why the electric cars produced there also cost much less than here. But prices tend to go up once the vehicles are sold on our territory, in particular because of taxes.

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