Currently reading: China's domestic car makers are failing to compete
China's domestic car manufacturers need look to their home markets before trying to expand internationally
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2 mins read
30 October 2013

China’s ailing car makers must “conquer their home market” before they have any chance of succeeding globally, according to Asian car industry consultant Bill Russo.

The home-market share of China’s car makers has been falling for some years, with passenger car sales by domestic brands dropping to just under 29 per cent of the market last year.  

China is expected to export around 580,000 cars this year, a fall on last year, and many of the vehicles will be sold to less competitive markets such as the Middle East, Africa and Latin America.

Making inroads into the US, Western Europe and Asia-Pacific markets is still seen as a huge step, despite the Chinese government wanting to see its domestic car industry exporting to the rest of the world.

Speaking at last week’s Global Automotive Forum in Wuhan, China, Russo said although China would be the “centre of the automotive universe in the 21st century”, a globally competitive car maker had yet to emerge from the country. “It is difficult to live in the West and not buy Chinese-made goods, but where is the Chinese Hyundai?” he said.

Russo, who was director of product and business strategy at DaimlerChrysler, said the first hurdles for the domestic Chinese car makers were the problems caused by the “fragmentation” of the industry around the huge country. “There is no Chinese Detroit,” he said. “We need to see a consolidation of Chinese companies and get rid of the weakest. Such small companies cannot grow to scale in competitive markets.”

The next step, according to Russo, is for China’s brands to “develop a value proposition”, which he suggested could be “affordable transportation”. Referring to many domestic car makers who still think that undercutting imported cars is the most effective strategy, he said “China cannot trade on the proposition of ‘cheap’ cars”, because cheap is associated with poor quality. “‘Affordable’ is a much more positive association,” he said. 

Business paper China Automotive Review underlined the problems facing domestic brands even when equipped with cutting-edge technology, pointing out that just 4905 Roewe 950 models were sold last year, while its Buick LaCrosse sister car (which shares the same GM Epsilon platform) sold 86,100 units.

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John O'Groats 26 November 2013

Not up to snuff

I'd sooner throw a saddle over a dung beetle and rely on that mode of transport than put down cold hard cash for the any of the current range of Chinese vehicles.
Gerhard 10 November 2013

A Naïve Report

This is a naïve report from the above mentioned consultant, as he fails to realise that the domestic market suffers the same malaise as the British market once suffered, in that most buyers prefer foreign brands, which have a more fashionable image, to the less-trendy domestic brands. This is why MG sold only a few hundred cars in the U.K. this year. This wouldn't have been quite such the case if VW hadn't all-but-cornered the domestic passenger car market in China a decade or more ago. The average Chinese consumer of passenger cars is well aware of how the brands measure up, which is why even a Skoda outsells an obviously-domestic MG. The young and even semi-affluent car buyer still prefers Ford to Emgrand or VW to Chery as this reflects their international, sophisticated and trendy image, in a way that a Chery Cowin 5 never would. Let us not forget that while a Wuling tops the best-selling lists ahead of a VW Lavida, it is because the Wuling is bought by the multitude of farmers who would not be able to bring an obviously commercial vehicle into a city, cost-effectively, to sell their produce. That is why the non-farming urban millions buy millions of Lavidas and Buick Excelles and Chevy Cruzes. Only Great Wall with its stylish and affordble SUVs comes close, but because it makes SUVs, which every urban/suburban Chinese knows is the style in vogue at the moment around the western world. The domestically-branded manufacturers will have an almighty struggle to compete on a level with the entrenched, foreign-branded opposition, regardless of the quality of their products, as they will never be able to overtake the brand-image of VW et al. They would be better off continuing to cater to the regional and poorer urban populations with quality, but simple and good-value products. Something which is not beyond the capabilities of BYD, Chery or the various Geely brands and is evidenced to some extent by Great Wall.
bunty 30 October 2013

Shocking reliabilty

One problem seems to be quality assurance.

Some people who have purchased the MG6 have got rid of them because of poor reliability according to posters of the MG Rover website.