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Rising exports ease blow of drop in sales at home
By Lu Nengneng |
October 24, 2012, Wednesday
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Print Edition
Print Edition
CHINESE carmakers are trying to make up losing ground in the domestic market by expanding operations and sales overseas. Still, no matter where they go, it's a tough fight for market share.
Car sales in China last month slid 1.75 percent from a year earlier, but car exports soared 48.4 percent to a monthly record.
In the first nine months of the year, domestic carmakers delivered 785,300 units overseas, a 27.9 percent increase on route to the 1 million mark.
Though the figure represents only 5 percent of China's annual car production, outbound sales are a big boon for Chinese car brands with lackluster domestic performances.
The market share of Chinese carmakers in the domestic passenger car segment dropped 1.7 percentage points in the first three quarters to 40.6 percent.
Dong Yang, secretary-general of the China Association of Automobile Manufacturers, has forecast that half of domestic car brands will get squeezed out in the next three to five years if China's auto sales growth continues its slowdown.
Chery, the biggest car exporter in China, would have suffered a 10 percent sales decrease in the first nine months had it not been for a 22 percent increase in orders from overseas, which accounted for nearly 40 percent of the company's business.
Chinese cars have a certain appeal overseas, especially in developing countries, because of their low sticker prices. Still, prices aided by China's export rebate policies "may give importing countries an excuse to take trade protectionist measures" one day, warned Zhang Xin, an auto analyst at Guotai Junan Securities.
The competitive edge of domestic automakers may also erode amid the yuan's continuing appreciation.
To safeguard their presence in fledgling markets, many Chinese carmakers are localizing their manufacturing abroad.
Chery recently doubled down on its investment in Brazil, aiming to raise its production capacity in the world's fourth-largest auto market to up to 150,000 units a year from the 50,000 units scheduled for 2013.
FAW Group, China's second-largest automaker, is set to make cars in South Africa in 2014 as part of its plan to achieve 150,000 annual overseas sales by 2015.
Geely opened its first assembly line in Egypt this month in a strategic move to crack markets in the Middle East and North Africa.
"China's domestic car brands have made the right call going overseas for sales, production and development, but they shouldn't get carried away by the blossoming sales," said Zhang Boshun, secretary-general of the Market and Trade Commission at China Association of Automobile Manufacturers.
"Besides research and development," he said, "Chinese carmakers need to improve their management, talent recruitment and development, and branding."
It would be a wise choice to put equal stress on developing both abroad and at home, he added.
Car sales in China last month slid 1.75 percent from a year earlier, but car exports soared 48.4 percent to a monthly record.
In the first nine months of the year, domestic carmakers delivered 785,300 units overseas, a 27.9 percent increase on route to the 1 million mark.
Though the figure represents only 5 percent of China's annual car production, outbound sales are a big boon for Chinese car brands with lackluster domestic performances.
The market share of Chinese carmakers in the domestic passenger car segment dropped 1.7 percentage points in the first three quarters to 40.6 percent.
Dong Yang, secretary-general of the China Association of Automobile Manufacturers, has forecast that half of domestic car brands will get squeezed out in the next three to five years if China's auto sales growth continues its slowdown.
Chery, the biggest car exporter in China, would have suffered a 10 percent sales decrease in the first nine months had it not been for a 22 percent increase in orders from overseas, which accounted for nearly 40 percent of the company's business.
Chinese cars have a certain appeal overseas, especially in developing countries, because of their low sticker prices. Still, prices aided by China's export rebate policies "may give importing countries an excuse to take trade protectionist measures" one day, warned Zhang Xin, an auto analyst at Guotai Junan Securities.
The competitive edge of domestic automakers may also erode amid the yuan's continuing appreciation.
To safeguard their presence in fledgling markets, many Chinese carmakers are localizing their manufacturing abroad.
Chery recently doubled down on its investment in Brazil, aiming to raise its production capacity in the world's fourth-largest auto market to up to 150,000 units a year from the 50,000 units scheduled for 2013.
FAW Group, China's second-largest automaker, is set to make cars in South Africa in 2014 as part of its plan to achieve 150,000 annual overseas sales by 2015.
Geely opened its first assembly line in Egypt this month in a strategic move to crack markets in the Middle East and North Africa.
"China's domestic car brands have made the right call going overseas for sales, production and development, but they shouldn't get carried away by the blossoming sales," said Zhang Boshun, secretary-general of the Market and Trade Commission at China Association of Automobile Manufacturers.
"Besides research and development," he said, "Chinese carmakers need to improve their management, talent recruitment and development, and branding."
It would be a wise choice to put equal stress on developing both abroad and at home, he added.
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