China’s Auto Exports: Small but Posting Strong Growth

Marvin Zhu

In 2011, China’s automakers shipped nearly 850,000 vehicles from different harbors in China to other world regions. Exports were up 50% from the previous year and contributed US $11 billion (69.55 billion RMB) to the country’s trade balance, which was an increase of 57% from 2010.

While most of the Chinese home-grown brands are suffering to some extent from declining market share in the domestic market, surging exports might help local automakers to counter this decline, according to Marvin Zhu, senior automotive analyst with LMC Automotive.* Recently, he wrote about how China’s local automakers are making inroads in other countries’ auto markets in China Automotive Monthly, published for J.D. Power Asia Pacific. The article is excerpted:

Some Local Companies are Already Overseas Players

Chery, China’s largest local carmaker, recorded sales of 642,000 units in 2011, down 6% year over year. Its export volume reached 160,000 units, which amounted to one-fourth of the company’s total sales. Last July, Chery set up a US $400 million (2.54 billion RMB), fully-owned factory with a complete production line in Brazil. It became the Wuhu-based carmaker’s 17th overseas plant. While this growth and investment is happening internationally, the company announced it would drastically reduce its investments for ongoing R&D projects for the local market. Continue reading ›

A Suggestion to Chinese OEMs: Focus on Strengthening Existing Brands

 

Tim Dunne

China’s automotive market currently offers more than 60 locally produced brands and nearly 20 imported, or foreign, brands. As if that were not enough, we recently learned that several more entrants intend to join the fray. Among them are two new brands developed by Chinese domestic automakers.

The FAW Car Group unveiled the Olney brand in November. The company said that the brand would be targeted at younger consumers. The first Olney car will be priced between 80,000-100,000 RMB ($12,500-$15,600) and is scheduled to launch in March 2012.

Chery Automobile Co. also announced plans in November to launch a new passenger-vehicle brand named Qoros. The brand’s vehicle will be built by Qoros Automotive Co., a 50-50 joint venture between Chery and the Israel Corp., an investment firm based in Israel. The company said it has three passenger-car models under development, the first of which is scheduled to launch in late 2013. Continue reading ›

Risks Apparent as China Remains Preoccupied with Size and Speed

 

Marvin Zhu

China’s government has earmarked a previously unimaginable 2 trillion yuan (about $300 billion) to build the world’s largest national high-speed railway network. So far, only about half of the total planned route distance of 25,000 kilometers (16,000 miles) has been completed. One of the most recent additions to China’s high-speed railway marvel is an express train between Beijing and Shanghai, which opened in June 2011, some two years ahead of schedule.

China’s ambitious “great leap forward” in industrialization and modernization has been understandably making headlines around the globe. However, these glowing platitudes abruptly turned somber on July 23, 2011, when one of the celebrated Beijing-Shanghai high-speed railroad trains crashed, killing 40 people and injuring some 200 others.

While bad weather and a subsequent system failure were found to be the main causes of the crash, some people speculate that the haste with which the railway was built—driven by thought of generating fast profits and political goodwill—should not be overlooked as a mitigating factor. China has been operating for some time on a progressively “build bigger, go faster” agenda, one where safety and reliability are not always given top priority.

Automotive Industry Caught in Bigger, Faster Tailwind

For more than a decade now, the “build bigger, go faster” mantra has prevailed in China’s automotive industry as well. Ever since China supplanted the US as the world’s largest automotive market in 2009, industry players have been in a fierce race to expand. Over the past two years alone, trillions of yuan have been invested in the car-making business, as automakers race to ramp up production. This frenzied expansion is expected to raise China’s vehicle production capacity to 31 million units by 2013, nearly doubling total sales recorded in 2010. Continue reading ›