Home » Business » Autotalk Special
China car makers tackle lemon image
By Liang Yiwen and Shao Shijie |
July 20, 2011, Wednesday
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Print Edition
Print Edition
WHEN it comes to buying a car, most Chinese still favor imported brands over those made in China, but there are signs the gap is narrowing, industry analysts say.
A recent survey published by Shanghai Jiao Tong University ranked Chinese car buyer satisfaction with imported cars at 87 on a scale of 100. Cars manufactured by Sino-foreign joint ventures scored 84, with domestic cars placing third at 80.
Discussing the poorer showing by domestic car models, the university report cited defects and malfunctions, poor repair work and sloppy after-sales service for the public dissatisfaction.
The study surveyed nearly 1,000 car owners in Shanghai and the Yangtze Delta.
Beijing Benz, BMW-Brilliance and GAC Toyota were the top three picks among joint-venture brands for customer satisfaction. Volkswagen, Aston Martin and Kia Motors topped the list for imported cars.
In the domestic brand category, FAW Car, Chery and BYD ranked as the brands most likely to have breakdowns or bugs.
Industrial analysts blame the short-sightedness of domestic auto makers for the gap in public confidence. They say Chinese car makers haven't invested enough in research and development and have sacrificed quality for price to keep their cars the cheapest on the market.
"Chinese car makers still lag foreign rivals in investment on engineering," said John Zeng, director of Asian Forecasting at J.D. Power & Associates in Shanghai. "That makes it hard for their models to compete with rivals using the latest in advanced automotive technology."
According to China Association of Automobile Manufacturers, China's domestic car makers sold a combined 3.15 million passenger cars in the first half of this year, down 0.82 percent from a year earlier.
Chinese brands accounted for 44.3 percent of the passenger car segment, a decrease of 2.96 percentage point from the same period a year ago.
Still, the gap with foreign rivals is narrowing, analysts say. Local auto makers like SAIC, FAW and Great Wall have made great strides in the 30 years since domestic companies were founded.
Increasingly, Chinese auto makers are being forced to upgrade the quality of their vehicles to hold onto market share and to pursue dreams of overseas expansion.
"What Chinese auto makers lack most is consumer trust," said independent auto analyst Zhang Zhiyong. "If they want to put their brands on buyers' shopping lists, they need to produce higher-quality cars."
Mei Songlin, general manager of research services at J.D. Power Asia Pacific, agreed.
"Maintaining a competitive advantage based on high quality is critical for any auto maker," said Mei. "Having a good reputation is important when people think about what cars they will buy. Reputation spreads quickly by word-of-mouth. Nobody is going to buy a car model that gets bad reviews from friends and relatives."If Chinese auto makers want to move up the ladder into the mid-to high-class segments, they will have to develop better engines and transmissions, and that requires better technologies," Mei said.
Some Chinese car makers are heeding the advice.
Zhu Ronghua, vice director of Changan Auto Group, recently said his company will invest more than 5 percent of annual revenue in technology development.
In the past five years, the car maker's spending on research and development exceeded 16 billion yuan (US$2.5 billion), including the establishment of 13 laboratories doing research on crash testing and noise reduction.
Electric-car producer BYD said on May 5 that it plans to allocate 1.14 billion yuan from its share sale on the Shenzhen Stock Exchange toward research and development, and expansion of production facilities in the Pearl River Delta city of Shenzhen.
Beijing Automotive Group, which is on track to roll out its first self-brand vehicles, will start up its new research center in Beijing in second half of this year. The facility will employ more than 2,500 engineers. According to a J.D. Power report last October, the product quality of Chinese brands has improved.
The study, covering 33 Chinese cities, examined problems experienced by 14,649 new vehicle owners within the first two to six months of ownership.
It found the quality of domestically manufactured vehicles improved to 224 problems per 100 vehicles from 258 a year earlier. By contrast, the quality of international brands stood at 135 problems per 100 vehicles.
"The gap has been narrowing through domestic car makers' efforts," said Zeng. "We expect there will be a great improvement in the next five to eight years, allowing Chinese car makers to catch up with foreign rivals."
A recent survey published by Shanghai Jiao Tong University ranked Chinese car buyer satisfaction with imported cars at 87 on a scale of 100. Cars manufactured by Sino-foreign joint ventures scored 84, with domestic cars placing third at 80.
Discussing the poorer showing by domestic car models, the university report cited defects and malfunctions, poor repair work and sloppy after-sales service for the public dissatisfaction.
The study surveyed nearly 1,000 car owners in Shanghai and the Yangtze Delta.
Beijing Benz, BMW-Brilliance and GAC Toyota were the top three picks among joint-venture brands for customer satisfaction. Volkswagen, Aston Martin and Kia Motors topped the list for imported cars.
In the domestic brand category, FAW Car, Chery and BYD ranked as the brands most likely to have breakdowns or bugs.
Industrial analysts blame the short-sightedness of domestic auto makers for the gap in public confidence. They say Chinese car makers haven't invested enough in research and development and have sacrificed quality for price to keep their cars the cheapest on the market.
"Chinese car makers still lag foreign rivals in investment on engineering," said John Zeng, director of Asian Forecasting at J.D. Power & Associates in Shanghai. "That makes it hard for their models to compete with rivals using the latest in advanced automotive technology."
According to China Association of Automobile Manufacturers, China's domestic car makers sold a combined 3.15 million passenger cars in the first half of this year, down 0.82 percent from a year earlier.
Chinese brands accounted for 44.3 percent of the passenger car segment, a decrease of 2.96 percentage point from the same period a year ago.
Still, the gap with foreign rivals is narrowing, analysts say. Local auto makers like SAIC, FAW and Great Wall have made great strides in the 30 years since domestic companies were founded.
Increasingly, Chinese auto makers are being forced to upgrade the quality of their vehicles to hold onto market share and to pursue dreams of overseas expansion.
"What Chinese auto makers lack most is consumer trust," said independent auto analyst Zhang Zhiyong. "If they want to put their brands on buyers' shopping lists, they need to produce higher-quality cars."
Mei Songlin, general manager of research services at J.D. Power Asia Pacific, agreed.
"Maintaining a competitive advantage based on high quality is critical for any auto maker," said Mei. "Having a good reputation is important when people think about what cars they will buy. Reputation spreads quickly by word-of-mouth. Nobody is going to buy a car model that gets bad reviews from friends and relatives."If Chinese auto makers want to move up the ladder into the mid-to high-class segments, they will have to develop better engines and transmissions, and that requires better technologies," Mei said.
Some Chinese car makers are heeding the advice.
Zhu Ronghua, vice director of Changan Auto Group, recently said his company will invest more than 5 percent of annual revenue in technology development.
In the past five years, the car maker's spending on research and development exceeded 16 billion yuan (US$2.5 billion), including the establishment of 13 laboratories doing research on crash testing and noise reduction.
Electric-car producer BYD said on May 5 that it plans to allocate 1.14 billion yuan from its share sale on the Shenzhen Stock Exchange toward research and development, and expansion of production facilities in the Pearl River Delta city of Shenzhen.
Beijing Automotive Group, which is on track to roll out its first self-brand vehicles, will start up its new research center in Beijing in second half of this year. The facility will employ more than 2,500 engineers. According to a J.D. Power report last October, the product quality of Chinese brands has improved.
The study, covering 33 Chinese cities, examined problems experienced by 14,649 new vehicle owners within the first two to six months of ownership.
It found the quality of domestically manufactured vehicles improved to 224 problems per 100 vehicles from 258 a year earlier. By contrast, the quality of international brands stood at 135 problems per 100 vehicles.
"The gap has been narrowing through domestic car makers' efforts," said Zeng. "We expect there will be a great improvement in the next five to eight years, allowing Chinese car makers to catch up with foreign rivals."
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