looking beyond covid-19: the auto sector – the road ahead set for industry change in china
jun 24, 2020
shanghai, june 24, 2020 —— according to cushman & wakefield’s recent report, looking beyond covid-19: the auto sector – the road ahead set for industry change in china, in the recent past, a growing economy and government policy in china has boosted auto sector growth in the country.
given the importance of the auto sector, the evident expanding market opportunities and the need to secure and service new business, over the years, auto companies have also steadily grown their organisations in china.
shaun brodie, head of occupier research, greater china, cushman & wakefield, said: “most large auto companies now have a very established business footprint in the country. today, however, even though the business presence has been established, many auto companies (particularly those newly emerging and fast developing auto sector-related companies) are still seeking to expand their commercial activity, and this is evidenced when examining office leasing activity rates in city markets around china. for example, when considering the number of grade a office leasing deals completed in china’s four first-tier cities, according to our data, between q4 2018 and q3 2019, companies in the manufacturing sector, which auto companies form a part of, were responsible for 4.7% of deals done in beijing, 12.0% of deals done in shanghai, 11.4% of deals done in shenzhen and 10.3% of deals done in guangzhou.”
during the covid-19 outbreak, general manufacturing supply chains in china experienced enormous stress as production and the goods distribution network were interrupted by factories in the region closing on a huge scale and transportation linkages severed to contain the virus.
moving forward, the pandemic has brought about a big rethink in terms of where the auto industry is heading and has further pushed the future development of the industry to centre around the pre-existing themes of environmental sustainability, innovation and new technology.
future technology is about to spur huge changes to the overall auto sector in china. new technology related to connectivity, digitisation and big data, battery electric vehicles, autonomous driving technology, fuel cell technology, ridesharing technology and the use of new materials will create new businesses within the auto sector and will dramatically transform the general industry.
jonathan wei, managing director, head of occupier services, china at cushman & wakefield, said: “with change and transformation in china’s auto sector market expected to occur, so auto sector property in terms of front offices; back offices; r&d centres; data centres; sales centres; manufacturing plants, and; logistics facilities…to name a few…should see knock-on effects in some form or another in the future. all this adjustment will not only affect auto sector plant portfolios but also much of the rest of the supporting property portfolio, from offices to logistics facilities, and these will also need to either alter or become more efficient in terms of space usage to accommodate a resulting modification in staff numbers.”
notably, when selling vehicles, innovation in distribution is making the forms of car dealership much more diverse. apart from traditional 4s stores, (where sales are conducted and spare parts, services and surveys are available), novel car dealership forms are becoming increasingly popular in china, such as cars sold in car-dedicated ‘supermarkets’ and experience centres. auto dealership portfolios are expected to be influenced by this change.
reflecting on the future tech trends, we expect auto sector property portfolios in china to be impacted in the following ways in the years to come:
connectivity and digitisation, creating value out of big data, autonomous driving technology and ridesharing technology
connectivity and digitisation of vehicles (and the running of associated new web-based platforms), creating value out of big data, and autonomous driving technology in the future will usher in auto sector property portfolio change on a number of fronts in china. some changes will include:
· firstly, original equipment manufacturers (oems) which are looking to develop these technologies will be looking for business expansion space close to where their r&d centres are located to better house technology developers and support the development of the technologies. this space will most likely not be in downtown offices but will likely be in suburban offices or offices in business parks;
· secondly and similarly, suppliers and third-party service companies will need to take out similar additional office space;
· thirdly, once the technologies are up and running, they will require additional data centre space, with this space having increased power supply funnelled to it to run and cool the computers running and analysing the huge amount of generated data, and;
· fourthly, to run the new businesses associated with these new technologies, additional corporate space will also be required. front offices in visible quality downtown located offices or visible quality suburban located offices (depending on company preference) will be required in order to house business management, sales and marketing, finance and other related business groups. back offices in suburban locations will be required to house the various business admin groups.
new energy (battery and fuel cell powered vehicles) and the use of new materials will also impact auto sector property portfolios in china in many ways. some of these ways include:
· new or reconfigured existing r&d office space will need to be set up to continue to research and develop the new technology;
· new or reconfigured existing manufacturing plants will need to be established to manufacture batteries, fuel cells, parts made from the new materials and, ultimately, the new vehicles themselves;
· new or reconfigured existing logistics space will need to be created to store new parts and components;
· new or reconfigured existing dealership space will be needed to introduce the new vehicles;
· new charging stations will need to be built (if the oem is looking to shoulder the responsibility of building out and running the charging station infrastructure);
· new or reconfigured existing visible quality downtown or suburban front office space will need to be set up to house the new business’s corporate groups, and;
· new or reconfigured existing visible quality suburban back office space will need to be established to house the new businesses’ admin groups.
for more details about the auto sector and its road ahead set for industry change in china, please click to download the report.
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about cushman & wakefield
cushman & wakefield (nyse: cwk) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. cushman & wakefield is among the largest real estate services firms with approximately 53,000 employees in 400 offices and 60 countries. across greater china, there are 22 offices servicing the local market. the company won four of the top awards in the euromoney survey 2017 and 2018 in the categories of overall, agency letting/sales, valuation and research in china. in 2019, the firm had revenue of $8.8 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services. to learn more, visit www.cushmanwakefield.com or follow @cushwake on twitter.
for further information, please contact:
mandy qian
director, marketing & communications, greater china
tel: 86 10 8519 8040
mandy.qian@cushwake.com
