Why EU car brands might need sponsorship’s help to tackle BYD avoiding EU tariffs due to Hungary’s growing relationship with China

The Hungarian Prime Minister, Viktor Orbán, has been wooing China to such a degree that Hungary now accounts for 31% of all Chinese investment into Europe. This is more than Britain, France and Germany combined.

In one sense, it means Hungary is effectively acting as a Trojan Horse for Chinese firms entering Europe and car giant BYD is the latest beneficiary. The firm has just announced plans to establish their European HQ in Hungary, having already built four factories and facilities in the country.

Crucially, this means BYD could bypass tariffs that the European Union imposed on Chinese electric vehicles (EVs) last year in order to protect its own carmakers from the flood of cheap imports.

In other words, European car buyers will be able to buy BYD cars at much lower prices than if the tariffs were able to be imposed.

Auto analysts believe that once BYD starts producing cars from its Hungary plant it will rapidly increase its market share.

Although the EU is investigating China’s investment in Hungary and will continue to work on initiatives to protect its own carmakers, the potential threat means European car brands need to prepare to counter this huge advantage for BYD.

Where does sponsorship come in?
Clearly marketing will be one potential method for EU car brands to encourage people to consider buying their cars over BYD’s. However, this is difficult as:

1. EU cars are more expensive plus
2. They can’t play the better-quality angle as the quality of Chinese cars, particularly EVs, has improved dramatically.

This means EU car brands need to pull on other ‘levers’ or tactics to entice consumers. This is where sponsorship has particular advantages over other forms of marketing such as advertising.

Firstly, sponsorship creates a more positive association for the brand by aligning with a rights holder. Technically this is known as ‘borrowed equity’ – essentially improving a company’s reputation by associating themselves or ‘rubbing shoulders’ with a rights holder.

Secondly, and most importantly, if the sponsorship relates to something consumers care deeply about – be it sports, entertainment, the arts, or causes – this shared interest or passion fosters an emotional engagement that advertising doesn’t.

This is much more likely to generate consideration, purchase intent and loyalty among consumers. Loyalty is the holy grail for marketers (along with word of mouth recommendation).

In over-simplified terms, sponsorship can help with ‘soft’ levers or motivations when ‘hard’ product ones such as price and quality advantages aren’t relevant: the situation EU car brands face against BYD.

So, what can you do?

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What might your pitch be?

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