Top US firms are starting 2024 on the back foot in China, latest data shows, with erstwhile top sellers like Apple and Tesla losing out market share to local rivals and a slowing economy.
Apple’s iPhone sales in China plunged 24% year-on-year in the first six weeks of 2024, according to Hong Kong-based research firm Counterpoint.
Meanwhile, Tesla’s China sales last month declined 19% to their lowest level in more than a year, data from the China Passenger Car Association showed.
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Both firms have seen their market shares squeezed by local rivals such as smartphone-maker Huawei and electric vehicle giant BYD, while a larger economic slowdown shadows China.
Tesla’s Nasdaq-listed shares tanked more than 7% on Monday, on the back of its weak sales data, while shares of Apple were down 1.6% in premarket trading on Tuesday.
Both Apple and Tesla have been offering big discounts and incentives to their Chinese buyers — moves that, so far, have not been able to revive their sales.
Apple’s Huawei headache
While Apple’s sales plunged, its chief competitor in China in the premium smartphones category — Huawei —saw unit sales rise by 64% in the first six weeks of 2024.
Huawei gained ground in China at blazing speed last year after launching its Mate 60 series. The smartphones, powered by US sanctions-defeating 7nm chips, caught the market off-guard and triggered a wave of patriotic buying in China.
The smartphone series and the breakthrough chips — potentially funded by billions in Chinese state subsidies — spurred a stunning revival for Huawei — a firm that said it was fighting for survival a little more than a year ago.
Those wins meant Huawei rose to second place in China, with its market share expanding to 16.5% from 9.4% a year earlier.
Meanwhile, Apple’s share of the Chinese smartphone market dropped to 15.7%, putting it in fourth place, compared with second place in the same period of 2023 when it accounted for 19% of the market.
Apple “faced stiff competition at the high end from a resurgent Huawei while getting squeezed in the middle on aggressive pricing from the likes of OPPO, Vivo and Xiaomi,” Counterpoint’s senior analyst Mengmeng Zhang said.
A slowdown in China hasn’t helped the US company either. The world’s largest smartphone market shrank 7% during the period.
In a bid to tackle slowing sales, Apple began subsidising certain iPhone models by as much as 1,300 yuan ($180.68) last week through flagship stores on Tmall, Alibaba’s major marketplace platform. It had already offered iPhone discounts of up to 500 yuan on its official sites last month.
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‘Perfect storm’ for Tesla in China
Meanwhile, Tesla likely faced a slowdown in China during the Lunar New Year holidays — a period that has traditionally been good for auto deliveries. The holidays tend to attract first-time car buyers, a pattern likely disrupted by deflationary pressures and high youth unemployment in the world’s second-largest economy.
The fall in sales in its key market dimmed the outlook for Tesla’s global deliveries, at a time when the top EV maker is battling a decline in demand and rising competition, and is weighed down by a lack of entry-level vehicles and the age of its product line-up.
In China, the carmaker faces rising competition from rivals such as BYD — which stole Tesla’s crown as the world’s biggest EV-seller in the last quarter of 2023.
“It’s been a perfect storm of headwinds for Tesla in China. This was a negative data point that adds fuel to the fire around the stock,” Wedbush analyst Dan Ives said. Tesla shares have slumped about 24% since the start of the year.
Analyst Troy Teslike revised down his forecast for Tesla global deliveries for the first quarter of this year, saying weaker-than-expected China sales despite a price cut suggested “a demand problem.” In January, Tesla had also warned of “notably lower” sales growth for the year.
The Elon Musk-led carmaker has introduced a series of price cuts and incentives to fend off slowing demand in China. Last week, it unveiled new incentives including insurance subsidies to woo consumers in the world’s largest auto market.
Meanwhile, on Monday, BYD launched a new version of its best-selling car at a price lower than the final price of its discontinued predecessor, escalating a price war with rivals.
Even so, BYD also saw its sales fall 37% in February from a year earlier.
- Reuters, wth additional editing by Vishakha Saxena
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