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Xinhua Insight: Chinese brands step upmarket at Shanghai Auto Show

 

SHANGHAI, (Xinhua) -- Having lost market share to foreign competitors in the past year, Chinese car makers have come out fighting at the ongoing Shanghai Auto Show.

Instead of cheap knockoffs, domestic brands have brought upmarket models to the 2015 Shanghai International Automobile Industry Exhibition, the largest car show in China, which is also the largest car market in the world.

Dongfeng Motor has unveiled an impressive mass-production sedan that was no more than a concept at last year's Beijing Auto Show. The Guangzhou Auto Trumpchi GA8, arguably the most beautiful Chinese sedan ever built, has also debuted.

Geely Automobile, which bought Volvo in 2010, revealed a complete version of its flagship GC9 sedan, which has been selected as the official limousine of the Chinese Foreign Ministry.

Great Wall launched a sport utility vehicle (SUV) that was used by the only Chinese team in the Dakar Rally.

With this year's show taglined "Innovation for Upgrading", visitors to Shanghai's National Exhibition and Convention Center between April 22 and 29 are witnessing the improvements that Chinese brands have been making in recent years.

Jia Xinguang, standing director of the China Automobile Dealers Association, said Chinese car makers can now justify charging more for their models, having broken the "glass ceiling of 100,000 yuan (16,105 U.S. dollars)" as a result of more sophisticated design and manufacturing.

STEADY IMPROVEMENT VS. POOR PERFORMANCE

U.S. automotive industry consultancy J.D. Power said in its "2014 China Initial Quality Study" that Chinese auto makers have narrowed the gap with international brands in producing reliable vehicles.

The performance of some Chinese brands, including GAC Motor, Venucia, Roewe and Luxgen, bettered the industry average, according to the annual survey, which examined mechanical and design problems experienced by more than 21,000 Chinese buyers of new cars within the first two to six months of ownership in 51 Chinese cities.

The domestic and global brands will be on parity in terms of quality before the end of 2018, J.D. Power predicted.

However, as Chinese auto makers are trying to emerge as global players, they are also struggling to compete with big foreign names at home.

According to the China Association of Automobile Manufacturers (CAAM), Chinese brands had only a 22.4-percent share of the domestic sedan market in 2014, down 5.6 percent year on year.

Analyst Zhong Shi said Chinese firms have made incredible progress in pursuing global standards and improving product quality, "but commercially, domestic cars still have to stand the test of both the market and time."

WAY OUT

China has the world's most competitive car market, with twice as many brands and three times as many models on the market than in the United States. But it is also a market so large and lucrative that no domestic players can afford an industry shake-out.

Latest data from the CAAM shows China's auto sales are on track to increase 7 percent year on year to hit 25.1 million units in 2015.

According to the association, China's auto sales maintained an average annual increase of 24.1 percent from 2001 to 2010. The rate slowed to 6.8 percent from 2011 to 2014.

Despite the market slowdown, global car makers are taking on a growing presence in China. More Audis, BMWs, Mercedes and Land Rovers are rolling off assembly lines installed in China. Lower-end vehicles produced by joint ventures are also squeezing domestic brands.

Stepping up to nibble at a luxury market that has always been dominated by foreign companies is a natural way out for Chinese car makers, Zhong said.

According to official data, domestic brands accounted for 56.4 percent of the SUV market in China in the first three months of the year.

None of the vehicles brought to the show by Geely Automobile, a domestic company known for its low-end products, can be categorized as budget cars.

"It does not mean that we have given up on budget cars," said Zhao Fuquan, Geely vice president. "But the luxury models at the show do indicate the direction of our future development."

Speaking of the future, out of the 109 car models that made their global debut at the Shanghai Auto Show, 103 were new energy vehicles.

The number of new energy vehicles produced in China in 2014 stood at 78,000, up 350 percent year on year, and the number sold in the country hit 74,000, up 320 percent.

Explosive growth of the Chinese new energy vehicle market has offered a new arena for domestic firms in competing with overseas brands. Of the 103 new energy models, 51 are domestic brands.

BYD, China's leading electric and hybrid vehicle maker, has brought to Shanghai five new energy vehicles, named after five Chinese dynasties.

"We are not afraid of incoming foreign competitors in the new energy vehicle market. More players will be conducive to enlarging the market scope and our share of the cake as well," said a BYD executive at the exhibition.

 

 

 
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