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Chinese car-makers coming ready or not

Bottom up: The Geely IG is the sort of cheap city runabout that could have a major impact on the low end of the Australian car market.

Subaru warns that well-resourced Chinese will rapidly carve out market slice

Subaru logo7 Jun 2010

THE long-term influence of Chinese car-makers on the Australian market should not be underestimated, Subaru Australia says.

Managing director Nick Senior said: “The Chinese are coming, and in an increasingly crowded market, with $12-$13,000 cars.

“I would not dismiss it outright, but we would have a bigger opportunity in the short-term to grow our small car sales (than compete in the light-car segment).”

Mr Senior said the impact of Chinese manufacturers would be felt more rapidly than the Korean invasion.

“Hyundai were here in an ad-hoc way, and it was not really a serious effort until about 1993, and then when they put the Excel out there at $13,990,” he said.

“They really went well. They got traction, sales and market share. They’ve grown the brand as well – so it’s taken them 18 years.

“I don’t think it’ll take the Chinese 18 years to have a significant presence here.

“They’ve got the resources, they’ve got the (domestic) market that will help them amortise costs to put into R&D, and I’ve got a feeling that the Chinese are little bit more sales and marketing savvy than some of the other Asian competitors.

“Also, we’re seeing first-generation cars come – or at least first-generation for us – and I think by the second or third-generation cars, they are going to get some real impetus.”

 center imageLeft: BYD F0. Below: Chery A1.

Mr Senior said Subaru would not lose sales in the short term, but the threat of Chinese – and Korean – manufacturers one day offering the right product to lure away Subaru customers was top of mind.

“Today it is not significant to us, but sure, we’ve got to watch them as we have to watch the Koreans grow over time, and to say they’re not a competitor in the medium term is a head-in-the-sand response.”

Meanwhile, Mr Senior said continued bad economic news, including European debt and mortgage-rate rises, had discouraged private buyers to open their cheque books earlier this year.

“The European crisis is a bit unsettling for the average Australian who reads about this sort of thing,” he said.

“What we’ve seen is private buyers haven’t returned to the market in the numbers that we’ve seen prior to the GFC.

“The very significant factor is that while the market is up 20 per cent, business sales are up 24 per cent while private sales are up only 14 per cent.”

Business buyers are returning to the market after delaying new fleet purchases during the GFCBut Subaru relies on private buyers for the bulk of its sales.

“For those buyers to return, we need them to be confident, we need a strong share market, we need their sentiment to be positive, and things like the thing in Europe don’t help – and there’s the rise in interest rates as well.

“Some of the business is performing really well, but where we’re not seeing it is with these private buyers and for a brand like us it is very much the private buyers.

“There’s still that nervousness out there – it’s astonishing to see the VFACTS coming out every month so strong.”

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