GO
GoAutoLogo
MENU

Make / Model Search

News - latest article

Western car companies hit afterburners in China

Foreign currency: Chinese car-makers are facing stiff competition from foreign brands including Buick and Volkswagen.

Chinese-brand cars struggle as western auto giants turn up the investment heat

1 May 2012

CHINESE domestic motor companies are struggling to keep up with their western counterparts on their home patch in the face of unprecedented investment of capital and resources into new vehicles and manufacturing plants in the world’s biggest auto market.

Sales of Chinese-branded passenger cars in China fell 8.1 per cent in the first quarter of this year as the local companies – those without western joint-venture partners, at least – took the brunt of a slow-down in Chinese auto sales, which dipped 1.2 per cent.

The market share of the domestic brands slipped 3.2 percentage points in the first three months of 2012, to below 43 per cent, as the Chinese love affair with western-badged cars such as the Buick Excelle and Volkswagen Jetta showed no sign of waning.

In March, only two of the 20 top-selling passenger cars in China were Chinese-branded vehicles – the 14th placed FAW Xiali – based on an old Daihatsu Charade – and Great Wall Voleex C30.

The top seven vehicles were all from either GM or VW, and built in partnership with either Shanghai Automotive Industry Corporation (SAIC) or FAW Group – both state-backed companies and among the top four auto-makers in China.

In SUV sales, three of the top 10 sellers were Chinese, with the Great Wall Haval second behind the Honda CR-V.

The biggest western player in the market for seven years, General Motors, has enjoyed an 8.7 per cent sales increase this year, achieving a record 745,000 sales in the first quarter. Sales of Chevrolet brand vehicles lifted 11.1 per cent.

 center imageFrom top: The Volkswagen Jetta and FAW Xiali.

Anticipating a continuation of this positive sales climate, GM is one of a number of western companies to announce huge increases in production capacity and dealer representation – adding a massive 600 retail outlets this year alone – as it anticipates sales growth from last year’s 2.5 million GM vehicles to five million by 2016.

Volkswagen, Ford, Toyota and Suzuki are among other western companies planning ambitious investments in plants and other facilities in China, where they all hope to take an even larger slice of the Chinese market that many pundits expect to grow from 18.5 million last year to about 30 million by 2020.

GM China president and former Holden executive Kevin Wale is predicting that the market slowdown so far this year will not last, and that modest growth of up to 1.5 million units will take the Chinese market towards 20 million vehicles this year – another record.

By law, all the western companies are operating in joint ventures with local partners that have been happy to ride the success of the foreign badges backed by the leading-edge engineering and design that Chinese consumers desire.

The Chinese government has reacted to the growth of western brands by encouraging home-brand vehicles lines.

GM and its partners reacted by establishing their own Chinese brand, Baojun, last year, although sales of the budget brand’s vehicles are still small – only one-tenth the size of Buick’s sales last month. This year, Baojun is expected to shift 94,000 units.

However, GM and its partners are expecting bigger things from Baojun over the next few years, and its rivals agree, as they scramble to follow suit.

The problem for the independent Chinese brands such as Chery, Geely, Great Wall and BYD is that these new brands are targeting their stronghold, the lower end of the market in smaller cities and towns.

The Road to Recovery podcast series


Read more

Click to share

Click below to follow us on
Facebook  Twitter  Instagram

News categories

Motor industry news

GoAutoNews is Australia’s number one automotive industry journal covering the latest news, future and new model releases, market trends, industry personnel movements, and international events.

Catch up on all of the latest industry news with this week's edition of GoAutoNews
Click here