NZweek - With government support, home-grown auto brands will have a good chance to enter an official vehicle market currently dominated by foreign brands, analysts have said.
China's official vehicles, or those purchased by government departments for official use, are currently dominated by foreign brands like Volkswagen, Audi, Toyota and Buick.
Premier Li Keqiang said at a Sunday press conference that spending on hospitality, overseas trips for official purposes and purchases of official vehicles will be reduced.
The government has shown its support for indigenous automobile brands in a draft catalog of car models for government procurement released last year.
The catalog, released by the Ministry of Industry and Information Technology in March 2012, included only domestic car models.
"The direction of China¡¯s official vehicle reform is very reasonable," said Li Shufu, chairman of Zhejiang Geely Holding Group, a leading automaker.
Li said the government¡¯s policies will bring benefits for the country's indigenous brands.
The Hongqi H7, a luxury car model manufactured by the China FAW Group Corporation, has been ordered by more than 10 provincial government and some central government departments, company president Xu Xianping said.
However, since government procurement only accounts for about 3 percent of China¡¯s auto market, experts believe the procurement is mainly intended to encourage purchases of domestic brands.
"From a long-term perspective, the government¡¯s support for indigenous brands should concentrate more on research and development," said Zhang Peijie, general manager of FAW Car Co., a subsidiary of FAW Group.
To gain the trust of consumers and become competitive in the market, Chinese auto companies must continuously improve their product quality, Zhang said.