(Yicai) April 30 -- The Shanghai Auto Show has been open for a week. The strategies mapped out by major automakers are now entering the execution phase, with intelligence and supply chain regionalization continuing to reshape the global auto industry, according to industry professionals attending the 10-day event.

The excessive promotion of self-driving technology by carmakers has cooled down, while China's position as the "innovation brain" of the global auto industry has been further solidified, they also told Yicai.

The Shanghai Auto Show, one of the world's largest, is being held at the National Exhibition and Convention Center from April 23 through May 2, with a record nearly 1,000 companies from 26 countries and regions attending. Around 1,300 car models are on display, with over 100 making their debut, of which more than 70 percent are new energy vehicles.

Chinese firms are displaying impressive software capabilities at this year's show, with technologies no longer just concepts, but actually starting to be equipped in mass-produced models.

Huawei Technologies has brought its ADS 4 intelligent driving system, HarmonySpace 5 smart cockpit, and XMC digital chassis engine. Jueying, the smart car brand of artificial intelligence startup SenseTime Group, unveiled a "reinforcement learning" end-to-end self-driving solution, while auto giant BYD released its AI-powered vehicular intelligent architecture.

"The entire focus of Shanghai Auto 2025 is all about execution," Juergen Reers, senior managing director and global automotive and mobility lead at Accenture, said to Yicai. "Two years ago, we talked a lot about strategies, how to be more local for locals in China.

"Now it's all about models coming into the markets, the execution of the strategies with a focus on user-centric services enabled by software-defined vehicles," Reers noted. "SDV has been a very important trend over the last years as 95 percent of innovation is now created by software.”

"We see a very strong integration of AI into the SDV," said Markus Muessig, managing director and auto lead for the Asia Pacific and China at Accenture. "Chinese OEMs [original equipment manufacturers] are investing very heavily into LLMs [large language models] to make the cars smarter.”

"Chinese carmakers have focused on this from the beginning," Reers pointed out. "They have started as software-first companies, which has given them an advantage.”

Automakers in China have complete software development teams, achieving independent research and development from operating systems to user interfaces, while their overseas peers are still working on transformation.

Mercedes-Benz opened its Shanghai R&D center in 2022, focusing on intelligence, while Audi partnered with Huawei on smart cockpits. Volkswagen Group has debuted its first proprietary AI-powered, highly automated driving system at the Shanghai Auto Show, specifically developed for China's complex traffic conditions.

German automaker BMW has linked arms with Chinese internet titan Alibaba Group Holding on AI engines and will integrate DeepSeek AI into its China-made vehicles, solidifying the country's role as a testing ground for global car software innovation.

The auto industry faces the critical challenge of monetizing these new technological capabilities, according to Reers.

Transforming software capabilities into sustainable business models will likely determine carmakers' competitiveness, the experts noted. China's relevant exploration is directing global transformation, they said, adding that the technological leap is driving a deep restructuring of supply chains worldwide.

Electrification and SDVs require carmakers, battery manufacturers, tech companies, and energy firms to form entirely new ecological alliances, Muessig pointed out.

Supply Chain Regionalization

US President Donald Trump was the most mentioned figure in media reports and social media interactions during the first days of the Shanghai Auto Show, far ahead of second-placed Zhu Huarong, chairman of Changan Automobile.

This highlighted the uncertainty geopolitics has brought to the global auto market and supply chain, with the shift from globalization to regionalization in the industry repeatedly emphasized by many professionals at the event.

After the Biden administration imposed a 100 percent tariff on Chinese electric vehicles last year, the opportunity for Chinese carmakers to enter the US market dropped to zero, so Trump's new wave of import tariffs has no additional impact, according to Paul Gong, head of China autos research at UBS.

Chinese carmakers' Europe sales may decline after the European Union ditched the 17 percent to 35 percent additional tariffs on Chinese autos in favor of setting a minimum selling price, but the new move can ensure profit per vehicle, a big improvement compared with disorderly price wars, Gong pointed out.

If such an agreement is implemented, Chinese brands could reshape the perceptions of European consumers through high-price strategies, replicating the path of ‘Made in Germany’ from low to high-end, Gong added.

"We may have less of a globalization, stronger regionalization to serve markets in Europe, in Southeast Asia, or in South America," Muessig noted.

"It's to accelerate this transformation towards regionalizing the business model we've seen here in China already for some years," according to Reers. "China for China strategy, local for local, which is driven also by the differences in consumer preferences.”

Localization is not only a strategy to reduce logistics costs and avoid tariffs but also a necessary means to meet the unique needs of regional markets, Reers pointed out.

"The whole automotive industry is about collaboration," Muessig said. "To build a car, about 70 percent to 80 percent of your value creation comes out of your supplier network.”

The regionalization trend has also driven supply chain digitalization and intelligent manufacturing upgrades, with a tie-up promoting supply chain automation and data integration between Accenture and Schaeffler Group exemplifying the trend.

"We are bringing in the next level of robotics and factories, leveraging physical AI, using human robots to increase the productivity of factories," Reers said. The collaboration will help manufacturers achieve 24-month or even shorter product development cycles, which is crucial in global competition, he added.

Chinese supply chain companies are also actively adjusting their strategies. Changan Auto, Geely Holding Group, Guangzhou Automobile Group's new energy vehicle unit, GAC Aion, and others are building factories in Southeast Asia, while BYD's Hungary plant is expected to become operational in the second half of this year.

Chinese OEMs have been very fast in developing new cars or derivatives for vehicles, but assembly plants, supply chains, and automotive suppliers must be brought to other regions to have the same development speed while also following local requirements, Muessig pointed out.

Going Global

Chinese automakers' overseas expansion also sparked heated discussions during the Shanghai Auto Show. Chery Automobile reportedly invited thousands of dealers to its booth, with car bloggers making short videos and livestreaming in various languages.

China's auto exports jumped 23 percent to 6.41 million units last year, down from a 58 percent surge in 2023, according to data from the China Association of Automobile Manufacturers. The growth rate of Chinese car exports may further decline this year, with the figure likely to rise by around 500,000 units, equal to about 8 percent, Gong pointed out.

"When the Chinese OEMs go overseas, I think number one, they will have to be true to their own brand," Muessig noted. "So, each brand will have its own approach for going international. When you approach different regions, a very important point will be to integrate with the local culture in those regions.

"The other element, of course, will be to look at the full cycle of the product, not only selling it once, but the car needs to be maintained," Muessig said. "In many of those markets, residual value plays a very important role.”

Chinese brands will be significant players, even the dominant ones, over the next 10 years, but it is a process, noted Jasmine Wong, chief executive of international auto distributor Jameel Motors.

Self-Driving Push Cools

After the promotional chaos surrounding self-driving technology earlier this year, the trend began to show signs of cooling down at the Shanghai Auto Show.

China's Ministry of Industry and Information Technology proposed a series of regulatory requirements for promotion, functional use, and technical deployment in the intelligent driving field, leading most exhibitors to emphasize that they are displaying driver assistance and not autonomous driving technologies.

While the industry continues to push technology forward, everyone has had to step back and take a more responsible attitude toward consumers in marketing, emphasizing tech boundaries, Gong said, adding that this is more responsible regarding overall social and user safety.

"Autonomous driving has various aspects," Reers noted. "We have automated driving functions in self-driven vehicles, where it's important to ensure the safety of the operation and make sure that the drivers are using those functions also in a responsible way.

"It's important to have the technology in place, and the technology is mature, but also make sure in the communication, also in the way drivers are using those vehicles, that they are used in a responsible way," Reers added.

Competition in intelligent driving has entered the late stage, industry experts pointed out, noting that carmakers no longer need to focus on the future but need reliable solutions verified through large-scale testing.

Editor: Martin Kadiev