UBS Warns of Chinese Car Import Glut in Europe

Banking giant UBS has issued a warning about potential "logistical bottlenecks" in the European automotive market, citing that the volume of Chinese car imports to the continent has reached twice the level of actual sales. Chinese cars already command nearly 12% of the European market as of August, and UBS estimates this share could rise to approximately 20% by the end of the year due to the need to sell existing imported stock. A significant challenge highlighted by the bank, which is also present in Israel, is the shortage of available trucks to transport these vehicles from ports to storage facilities.

The growth of Chinese manufacturers in Europe is primarily driven by sales of electric and plug-in hybrid vehicles. According to data from analyst firm Dataforce, Chinese automakers already account for about 30% of all plug-in hybrid sales in the region.

The situation described by UBS bears a strong resemblance to the current market in Israel. Cars imported from China in recent months are overwhelming storage lots in northern Israel and around the port of Ashdod, as well as "first-hand, zero-kilometer" used car lots. Import volumes into Israel have surged significantly, partly due to the strong Israeli shekel and pressure from Chinese automakers on Israeli importers to purchase substantial quantities.

In August, Israel imported 27,755 vehicles, a 51% increase compared to August of the previous year. This surge is not solely driven by demand in Israel; the Chinese domestic car market has become highly competitive, significantly reducing profit margins for automakers there. One indicator of whether importers are successfully selling cars or struggling with storage is the sales data from the last three days of a calendar month. For example, approximately 14,000 cars were sold in the final three days of August in Israel, suggesting a large number of registrations to dealers and vehicle licensing.