As the European and Southeast Asian markets mature, China’s automotive industry is increasingly focusing on the Middle East, where countries are transitioning to green, low-carbon economies. Electric vehicles (EVs) are viewed as pivotal to this energy shift, opening a significant opportunity for Chinese brands. According to Chinese Customs data, in the first half of 2024, China’s passenger car exports to the Middle East reached 420,000 units, a 46.2% year-over-year increase, with new energy vehicles (NEVs) accounting for 19.6% of exports, establishing the region as a primary export market.

Market Localization Strategies by Chinese Automakers

    To strengthen their foothold in the Middle East, many Chinese automakers are implementing localization strategies. Companies are launching new models and partnering with local firms. For instance, Xpeng Motors introduced its G6 and G9 models in Dubai through a partnership with UAE-based Ali & Sons Holding LLC. GAC Aion unveiled its AION Y Plus model in Doha, Qatar, while Changan held a brand launch event in Riyadh, Saudi Arabia, introducing three new brands. BYD presented its models in Dubai, and Zeekr has plans to launch in Israel following a partnership agreement with Shlomo Group.

Middle Eastern capital has also shown a keen interest in China’s EV sector. On October 25, Pony.ai received a $100 million investment from Saudi Arabia’s NEOM Investment Fund to establish a joint venture in NEOM, aimed at providing autonomous driving solutions. Around the same time, NIO signed a strategic agreement with UAE’s CYVN to build an R&D center in Abu Dhabi, focusing on smart driving and AI, and to jointly develop a model tailored to the local market. NIO’s new Middle East and North Africa division will manage operations in the region.

Secretary General of the China Passenger Car Association, Cui Dongshu, noted that increasing collaborations between Chinese automakers and Middle Eastern entities reflect regional confidence in China’s NEV market and the growing competitiveness of Chinese brands.

Strategic Potential and Consumer Demand in the Middle East

    Research by consultancy firm Arthur D. Little shows that over 70% of Saudi consumers plan to buy an electric car, with 93% of them familiar with at least one Chinese brand. Cui pointed out that demand for sustainable development and economic transformation in the Middle East has drawn capital to China’s smart EV industry. Past investments by Middle Eastern funds, such as Kuwait Investment Authority (KIA) in Daimler and Qatar’s pre-IPO stake in Porsche, echo similar interest, with the transition to EVs now amplifying interest in Chinese automakers.

The Middle East’s strategic location as a crossroads of Asia, Europe, and Africa, along with tariff-free access to Europe and North America for some countries, offers Chinese automakers an ideal hub to expand into surrounding markets. As automotive technology advances, demand for intelligent features like smart cockpits has grown among Middle Eastern consumers. Zhang Shiyu, sales manager at Shanghai Yingtong International Trade, noted that intelligent features like voice interaction and smart driving, where Chinese brands excel, are particularly appealing to Middle Eastern consumers.

New Regulations in Secondhand Car Exports Boost Market Opportunities

    Chinese automakers currently export to the Middle East through two channels: authorized overseas dealers and parallel exports, often selling new vehicles registered as “secondhand.” Zhang explained that in the UAE, many dealers also represent Japanese brands, especially prominent family-owned businesses handling brands like Mercedes-Benz, Chevrolet, and General Motors. In Saudi Arabia, dealerships are more regionally distributed, with some focused on cities like Jeddah and Riyadh.

For exporters without direct factory authorization, parallel exports offer an alternative, where vehicles are purchased and registered as “secondhand” domestically before being reclassified as new upon export. Although Japan still dominates the region’s fuel vehicle market, NEVs provide an avenue for Chinese secondhand cars to gain traction. Zhang believes China’s recent success in NEV exports will elevate the global market position of Chinese secondhand vehicles.

In February, China’s Ministry of Commerce, alongside four other agencies, issued a notice launching nationwide secondhand car export operations as of March 1, detailing application procedures and licensing. Zhang anticipates that this regulation will attract more companies to the secondhand export market, infusing new energy into the international expansion of China’s auto industry.

（IRuniverse, Kasumi)

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