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Domestic carmakers fight to retain sales momentum
By Lu Nengneng |
November 23, 2012, Friday
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Print Edition
Print Edition
DOMESTIC carmakers still have a long road ahead to the top of China's auto market, even though they were apparently the biggest winners from the recent boycott of Japanese cars triggered by a bilateral territorial row.
In the past three months, the market share of Japanese car brands in the world's biggest vehicle market dropped 11.01 percentage points to 7.61 percent as anti-Japanese sentiment spread across China following the escalation of the Diaoyu Islands dispute.
In that same period, domestic players increased their market share by 8.66 percentage points to 45.09 percent, their highest level this year. Can Chinese car brands ride this momentum to stage a turnaround after so many years of sluggish performance?
Luo Lei, deputy secretary-general of the China Automobile Dealership Association, strikes a cautious note on that subject. He said the recent spike in sales of Chinese cars is largely the result of patriotic impulse, which probably won't last through Chinese Spring Festival in February, as some market observers have forecast.
In fact, the trend is already showing signs of weakening. In October, China's carmakers increased their market share 2.37 percentage points from a month earlier, only marginally higher than the 2.23-point gain by German competitors.
As patriotism fades, practicality returns. "Chinese car brands just aren't on the same level as their Japanese rivals, whether in sedans or in the sports utility vehicle segment," Shang Yugui, the new chief of Great Wall Motor Co, has admitted.
With a largely low-end line-up, Chinese carmakers can hardly fill the vacuum created by a sales slump in Japanese vehicles that dominate the mid-to-upper price ranges. The increase in domestic car sales was largely driven by a few hot-sellers with different market positions.
Great Wall posted 87 percent growth last month in deliveries of its SUV series Hover, which topped China's SUV sales at 21,994 units due to its cost-effectiveness. Another three domestic models made into the top 10 for the same reason.
Sales of the MG3 produced by SAIC surged 152.9 percent last month, overtaking the Ford Fiesta and Skoda Fabia to become the second best-selling small car in the A0 after the Volkswagen Polo.
Rao Da, secretary-general of the China Association of Automobile Manufacturers, said in a note that China's continuing efforts to develop its auto industry, with up to 20 billion yuan (US$3.2 billion) invested in the past two years, is gradually paying off. Indeed, a recent report from market research firm J.D. Power recognized a substantial improvement in the quality of Chinese cars this year.
Wu Jinghui, director at consulting firm AlixPartners, said it is heartening to see domestic carmakers increasing their investment in research and development, and pushing innovation and economies of scale. She said domestic manufacturers should adopt "platform-based manufacturing" or they risk smaller profit margins once their annual sales surpass the benchmark of 300,000 units.
Many of Chinese automakers seem to be taking that advice, expanding product lines to dispel their image as one-trick ponies.
In the past three months, the market share of Japanese car brands in the world's biggest vehicle market dropped 11.01 percentage points to 7.61 percent as anti-Japanese sentiment spread across China following the escalation of the Diaoyu Islands dispute.
In that same period, domestic players increased their market share by 8.66 percentage points to 45.09 percent, their highest level this year. Can Chinese car brands ride this momentum to stage a turnaround after so many years of sluggish performance?
Luo Lei, deputy secretary-general of the China Automobile Dealership Association, strikes a cautious note on that subject. He said the recent spike in sales of Chinese cars is largely the result of patriotic impulse, which probably won't last through Chinese Spring Festival in February, as some market observers have forecast.
In fact, the trend is already showing signs of weakening. In October, China's carmakers increased their market share 2.37 percentage points from a month earlier, only marginally higher than the 2.23-point gain by German competitors.
As patriotism fades, practicality returns. "Chinese car brands just aren't on the same level as their Japanese rivals, whether in sedans or in the sports utility vehicle segment," Shang Yugui, the new chief of Great Wall Motor Co, has admitted.
With a largely low-end line-up, Chinese carmakers can hardly fill the vacuum created by a sales slump in Japanese vehicles that dominate the mid-to-upper price ranges. The increase in domestic car sales was largely driven by a few hot-sellers with different market positions.
Great Wall posted 87 percent growth last month in deliveries of its SUV series Hover, which topped China's SUV sales at 21,994 units due to its cost-effectiveness. Another three domestic models made into the top 10 for the same reason.
Sales of the MG3 produced by SAIC surged 152.9 percent last month, overtaking the Ford Fiesta and Skoda Fabia to become the second best-selling small car in the A0 after the Volkswagen Polo.
Rao Da, secretary-general of the China Association of Automobile Manufacturers, said in a note that China's continuing efforts to develop its auto industry, with up to 20 billion yuan (US$3.2 billion) invested in the past two years, is gradually paying off. Indeed, a recent report from market research firm J.D. Power recognized a substantial improvement in the quality of Chinese cars this year.
Wu Jinghui, director at consulting firm AlixPartners, said it is heartening to see domestic carmakers increasing their investment in research and development, and pushing innovation and economies of scale. She said domestic manufacturers should adopt "platform-based manufacturing" or they risk smaller profit margins once their annual sales surpass the benchmark of 300,000 units.
Many of Chinese automakers seem to be taking that advice, expanding product lines to dispel their image as one-trick ponies.
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