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Daniel Ren

Chinese carmakers, saddled with excess capacity and weak demand at home, are taking a new approach to global expansion: utilising idled facilities abandoned by international marques.
By adopting an asset-light strategy, companies from Geely Auto to Great Wall Motor (GWM) can assemble their cars overseas at lower costs, broadening their influence on the global automotive sector, according to analysts.
“Mindful of profitability as well as geopolitical and operating risks, Chinese carmakers are refraining from building overseas plants, but overcapacity facing the global auto industry is offering them opportunities to accelerate their ‘go-global’ pace,” said Gao Shen, an independent analyst in Shanghai. “Several companies are going with the idea of an asset-light strategy.”
Under a typical asset-light strategy, a company holds only a small amount of fixed assets on its balance sheet. This move would allow mainland Chinese automotive groups to form tie-ups with international counterparts to tap their redundant facilities and establish supply chains to assemble electric vehicles (EVs).
On Monday, Bloomberg reported that Mercedes-Benz Group was in talks with Chinese SUV maker GWM to share the German carmaker’s factory in the port city of East London, South Africa.
The report comes less than two months after Chinese state-owned carmaker Chery Automobile agreed to take over Nissan Motor’s manufacturing assets in Rosslyn, an industrial suburb outside Pretoria, South Africa.
Nissan did not disclose the value of the deal, which is part of its broader turnaround plan to close or consolidate seven plants globally.
In November, Geely, the mainland’s second-largest carmaker, along with its parent Zhejiang Geely Holding Group, bought a 26.4 per cent stake in Renault Group’s Renault do Brasil, enabling it to assemble and sell vehicles through the French firm’s operations in the South American country.
Vehicles under both the Geely and Renault brands would be assembled at the plant in Sao Jose dos Pinhais, Parana, as Renault increased production and further sharpened the competitiveness of the cutting-edge industrial complex, the French group said in a statement.

The mainland’s assemblers and supply-chain vendors are at the vanguard of EV technology and production, buoyed by government support and consumers’ willingness to embrace innovation, according to analysts.
Banking on their design and production heft, Chinese-made intelligent EVs, featuring self-driving systems and digitalised cockpits, are becoming increasingly popular worldwide. Chinese carmakers are also doubling down on overseas expansion to improve profitability amid slowing deliveries at home.
But only a handful of the nearly 50 mainland-based EV builders, such as BYD, the world’s largest electric-car assembler, and Stellantis-backed Leapmotor, have been able to turn a profit amid overcapacity woes and brutal price wars on the mainland.
Last June, Li Shufu, founder and chairman of Geely, cautioned that Chinese EV makers could lose their manufacturing and cost advantages if risks from excess capacity and lacklustre sales were not managed properly.
He added that excess capacity around the world could be utilised as the company implemented its globalisation strategy without expending its resources.
In January, Deutsche Bank forecast mainland passenger car sales would fall 5 per cent this year, while UBS projected a 2 per cent decline, citing overcapacity and the phasing out of a tax incentive.
BYD is targeting a 24 per cent increase in overseas deliveries this year, aiming to ship 1.3 million vehicles to international customers, according to Li Yunfei, its general manager of branding and public relations.
Xpeng, a leading premium EV maker, is aiming to double its overseas sales to 90,000 in 2026, about 15 per cent of its targeted annual output.
On the mainland, Chinese carmakers’ average net per-vehicle ­margin – the gap between the ­selling price and production cost – stood at about 5,000 yuan (US$727), according to Nick Lai, head of auto research for Asia-Pacific at JPMorgan Chase.
He said in October that this margin could rise fourfold to 20,000 yuan in overseas markets, where the cars could command higher prices.


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Great Wall Motors, Geely and other Chinese carmakers are using an asset-light strategy to accelerate their growth overseas


Great Wall Motors, Geely and other Chinese carmakers are using an asset-light strategy to accelerate their growth overseas.


Carpool: Chinese giants use idled foreign plants to fuel global expansion

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Great Wall Motors, Geely and other Chinese carmakers are using an asset-light strategy to accelerate their growth overseas

Great Wall Motors, Geely and other Chinese carmakers are using an asset-light strategy to accelerate their growth overseas