Chinese government aiming for half of Chinese car sales to be from Chinese co’s by 2015
China Daily has an interesting article that details China’s most ambitious plans to date; to make 50% of car sales in China be from domestic rather than foreign automotive brands by 2015, however if you look at the statistics for sales in 2009, just over 44% of car sales in China last year were from Chinese automakers, which shows their 50% marker is not far away at all.
The shocking thing of all is the number of automakers in China, the article states there are now 130 in total. This final number might be a mixture of light truck and passenger cars however.
The China Daily:
The central government plans to implement a new policy in the first half of this year to encourage auto industry consolidation and further the development of Chinese-brand passenger vehicles, an official from the Ministry of Industry and Information Technology said at a recent news conference.
According to sources with knowledge of the new policy, it intends that Chinese-brand passenger vehicles will comprise at least half of vehicle sales by 2015 and sedans made by entirely domestic automakers will have about 40 percent of the nation’s car market.
Statistics from the China Association of Automobile Manufacturers (CAAM) show that 4.58 million Chinese-brand passenger vehicles were sold last year, some 44.3 percent of the total.
Sales of domestic sedans hit 2.22 million units, almost 30 percent of the segment.
The new policy will also focus on accelerating consolidation between automakers and could lead to a new round of reshuffling, industry insiders said.
China became the world’s largest auto producer and market last year with both production and sales surpassing 13.5 million vehicles due in part to government incentives.
There are now more than 130 carmakers across the country, but most of them are small enterprises with annual production and sales of fewer than 10,000 units.
Only five had sales of more than 1 million units last year as the country’s top 10 carmakers moved a total of 11.89 million vehicles to account for 87 percent of overall sales, according to market data.
Consolidation moves
Last year, Chang’an Motor Corp acquired two minivan makers – Hafei and Changhe – as well as engine producer Dong’an Auto from the Aviation Industry Corp of China (AVIC), marking the biggest asset deal ever between State-owned auto companies.
Chang’an is the fourth-largest motor group in China and the local partner of US carmaker Ford Motor and Japan’s Mazda and Suzuki. After the acquisition, Chang’an’s 2009 sales were only 30,000 units behind Dongfeng, the country’s third-largest motor group.
Guangzhou Automobile Group Corp, the country’s sixth-biggest automaker, bought a 29 percent stake of Shanghai-listed SUV maker Changfeng Motor Co Ltd for 1 billion yuan in May last year.
Beijing Automobile Industry Holding Corp, China’s fifth-largest carmaker, reportedly finalized a deal last month to buy a 40 percent stake in Daimler AG’s van joint venture with Fujian Motor Industry Corp.
By 2012 policymakers hope consolidation will result in two to three large-scale auto groups, each with annual production capacity surpassing 2 million units, and four to five companies with annual output of more than 1 million vehicles, according to the national auto industry revitalization plan released in March last year.
The current top-four Chinese motor groups are SAIC Motor Corp, FAW Group, Dongfeng Motor and Chang’an Motor. Carmakers including Beijing Automobile, Guangzhou Automobile, Chery, Geely and Sinotruk form the second tier in the country’s auto industry.
Going global
Li Yizhong, minister of Industry and Information Technology, said recently that in addition to fueling industry consolidation, the government will also implement measures to encourage domestic automakers in reaching overseas this year through investment, acquisition of foreign brands, building research and development facilities and developing sales networks.
Industry sources said that the new policy calls for 20 percent of overall sales by major auto groups to be generated overseas in the next few years.
In the wake of the financial crisis, China’s vehicle exports fell sharply by 45.7 percent to 369,600 units last year, according to statistics from the General Administration of Customs. Industry analysts generally expect a rebound in car shipments this year as the foreign markets begin to recover.
Despite the poor export performance, Chinese companies were aggressive in acquiring overseas assets in 2009.
Homegrown carmaker Geely’s bid for Swedish luxury brand Volvo received a lot of media exposure in 2009. The Zhejiang-based company will reportedly close the deal soon.
Beijing Automotive bought some of Swedish carmaker Saab’s core assets and technologies for $200 million last year.
Li noted that along with encouraging acquisitions and consolidation, the government will restrain overcapacity in the auto industry.
Li also said that the ministry will accelerate the development of new energy vehicles, including hybrid, pure electric and fuel battery models.
The new policy will reportedly stipulate that Chinese partners hold at least a 50 percent share in newly built Sino-foreign joint ventures that produce core parts for alternative-energy vehicles.
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Sales could be closer to 60% by 2015 the way things are going. All it needs is a few more policies aimed at certain buyers and also that all cars purchased with government money must be from local manufacturers. Rather than just giving the local firms the silver spoon they should place certain emission and safely standards on vehicles purchased. With the govt leading the way with a modern efficient fleet the regular consumers mindset may change more quickly….. A win-win on both counts.
@ woxihuanpijiu
> All it needs is a few more policies aimed at certain buyers and also that all cars purchased with government money must be from local manufacturers.
That’s against WTO rule and would cause a massive trade friction with Germany and US. Governments can require certain percentage of domestic content to receive auto subsidy and government purchases, but not domestic brands.
China could also argue that the US and Germany giving a bailout to its car firms (and others) is also against WTO rules. http://www.iie.com/publications/interstitial.cfm?ResearchID=1124
As I said, don’t just give them money. Make all government purchases meet certain emission and safety criteria thus raising the standard of vehicles available.
@ woxihuanpijiu
> China could also argue that the US and Germany giving a bailout to its car firms (and others) is also against WTO rules
China’s got even bigger problems, with all the government ownership of automakers.
At least it’s better than not being able to survive. Chinese automakers’ problems are nothing compared to GM and Chrysler.
So you think 130 auto makers are going to survive in China? You are pretty thick. There are plenty of Chinese car companies fighting for their lives right now. The Chinese market is good and easy to sell in but a 130 companies is just ridiculous.
@ Ed
> Chinese automakers’ problems are nothing compared to GM and Chrysler.
Actually it is the other way around.
As long as the Chinese continue to increase their support for their own car brands, the Chinese auto industry will continue to catch up to their foreign rivals.
@ Kimchi_Stinks
Well, Wall Street Journal disagrees.
http://online.wsj.com/article/SB10001424052748704454304575080792207769522.html?mod=WSJ_latestheadlines
Wall Street Journal is repeating exactly what I have said about problems of Chinese automakers in the past.
Well, Wall Street Journal is not God. Anything can happen, as we’ve seen from GM and Toyota, one story writer’s opinions from Wall Street Journal doesn’t mean anything. There are also numbers of news agencies in China that do agree. Again, who’s right and wrong? Who’s to say who is right and wrong?
The best outcome is the Chinese government forcing everyone to boost up quality and engineering. Helps sales in China and over seas. Then they can be a real force.
@ Head Honcho
> The best outcome is the Chinese government forcing everyone to boost up quality and engineering.
The problem is that there are always going to be a few bad apples to cheat and ruin the image and reputation of all Chinese brands. SAIC maybe trying to do it the legal way(let’s ignore Ssangyong case for a while), but it is still hampered by being a Chinese car.
If you don’t believe this, then look at the latest melamine tainted milk scandal in China; you would think melamine-tainted milk is gone from China for good after the scandal of 2008, but no, it’s back.
Then what does China have to do? Chinese central government must get involved and certify what model could be exported and what not. Roewe 550? Yes. BYD E6? Hell no. You get the picture.
That isn’t all they need to do. They need to really go back to colleges and push more on creative engineering classes. I am not familiar with the education system but it really seems like creativity is lacking.
I have 10 engineers at my factory and I will give them an idea and they come back with exactly the same thing at the same quality until I go out there and give them ideas on other ways to do it. You really do have to look hard to find a creative engineer. Maybe 1 in 40 or 50 from the interviews and hiring we have done.
They are very creative, you just don’t see it, just like how you don’t see anything else going on around you in China.
Ed why don’t you come visit China and then make your post.
I agree with HH on this one and I do have first hand knowledge of the education system in China. The Chinese education system is not designed with creativity in mind. This starts at a very young age (kindergarten) and continues right through until university level. Students are taught to study and pass the final exam and don’t have much leeway from that. University is basically a free ride for some, especially if mommy and daddy helped them get there.
After they leave school is when they start to think more for themselves and some do become innovators but most do not although that is changing but it will take time. Most Chinese do not like criticism especially when it could lead to them losing face and that contributes to the lack of creativity. Copying something is easy when it’s all you have been taught right through your life at school and breaking that mold and learning new things is difficult. The uni students from poorer and undeveloped places who worked their butts off to get to uni are more likely to be the ones who will become the innovators in the future, not the spoilt little brats who don’t turn up to class.
Ed, If you can give us some examples of Chinese being truly creative and world leading it would put a lot more weight into your argument and not just sound petty like IHC is most of the time with no facts to back himself up.
I went through the Chinese education system, I turned out alright, I think.
The Korean education system is far worse than the Chinese education system.
I did not say everyone. Just seems like creativity isn’t something being pushed much. Not sure how we got to anything about Korea since it was never mentioned. You have to love how every defense on here brings up GM, Chrysler or Korea.
So why is a BYD E6 a “hell no”? Got any good reasons? I didn’t think so. You’re so narrow-minded. The E6 could be one of the world’s best cars.
*the BYD E6
Could be but has BYD put anything out that is worth mentioning unless we are talking cheapest car you can buy on the market for the class.
BYD is taking an enormous risk by introducing the e6 on the west coast of the U.S. in Q4 of 2010. It has yet to enter the Chinese market, and thus is totally unproven and devoid of credentials. If you are going to enter a developed market fraught with hightly sophisiticated consumers, you have to put your best foot forward. Ask Toyota; they learned the hard way in 1958. Stay home awhile longer BYD, until you get it right…..
@ Ed
> So why is a BYD E6 a “hell no”?
Some, including Wall Street Journal, have already test-drove one; their impression is that “I can’t believe BYD really plans to sell this half-baked car in the US”.
BYD E6 is not ready to come to the US. Heck, I don’t think any of BYDs are ready for the US market. If BYD does, then they stand to ruin their brand from the start, and ruin “China” brand for all other comers.
especially when you have 130 automakers in the country, lol. where is the hope for proper and thorough regulation. Unless they can compress that number 130 down to as little as possible then there will be hope. For the time being, with that gigantic number of automakers, corner cutting is inevitable.
Sirs,
Firstly: I do not believe anymore in Santa Clauss, therefore I would not consider as trustable any information coming from USA Press.
Since one guy from NYT called our President as an over-dranked man, by even never had the opportunity to met him. Believe they are basters like George W. Bush, who said that Iraq have chemical warpons.
Secondly: China has today 130 brands or even a little more and not less than 147 production plants. Independently from being begginers or experienced companies they have grown on a competitive market.
Thirdly: Government in China, makes a huge and deep report, which I have written a few years ago, called Prospects for the Chinese Car Industry a simple copy of their speach. Believe me that Chinese Government is acting well and is knowing exactly how to shift the pieces on the game´s square, depends therefore, exclusively on producers action to follow these indications. Internacionalization and control of production works for the stability of a healthy industry.
Fourthly: Copies and failures exists everywhere in the automotive industry, it happened in Brazil and also in Europe and USA. Suggest not to fail into the mistake to consider Chinese the real copy industry, because Ford, for example bought a Brazilian Producer called Troller (which produced a very good JEEP, which third companies supplied technologies) and a completely body style based on the Wrangler from Chrysler. And from here we can list many other cases. About the failures, is just to see my recent comments here and also to the press to become to a simple conclusion, no one is free to face the situation Toyota faced, but the worse is to wait the cort to order the recalls and corrections.
Fifthly: Why to desclassify the level of Chinese workers, You should have a walk around the world before. Look the very nice products some industry have introduced in the market during the last 6 years and maybe everyone here will agree that most of the products are becoming argly and not exactly evoluting in terms of design. Worth is the fact that in some markets people are not anymore comeeted with the companies they work for, than we could say that the so called Third World Countries (Emmerging Countries) become in much better condition than the First World Countries (Developed Countries).
Sixthly: Again, but again I will repeat: ” – KNOW HOW IS JUST A COMMODITY, IF YOU PAY FOR IT YOU WILL GET IT!!! ”
Best regards,
J.I.Hosang
Much of what you wrote is right on. I wouldn’t go as far as to call the US press any farther off than anywhere else though. Every country works the press as much as possible and China would be right at the top of that list. That is partially why many Chinese citizens tend to believe some of the things China does are so much better than anywhere else in the world because the press is pushing it that way even though the reality is that most other countries have already adopted something similar years previously. I am sure the Chinese government has a plan and China is the one of the few places in the world where the government can come in and really enforce everything on private companies.
@ J.I. Hosang
> I would not consider as trustable any information coming from USA Press.
Even if you don’t believe in articles of US press, you should be aware of them since those are indicative of how the US sees China. Any negative images of China overseas hurts China itself, not foreign countries.
Take the following example. Volvo brand has been synonymous with safety for four decades now, but people are now looking at Volvo in different colors and question its safety once Volvo brand got associated with Geely. Why? The brand “China” registers so negatively within the minds of foreign consumers so that anything even remotely associated with China is automatically seen negatively, and Volvo dealers worry that Volvo brand may get damaged if it is taken over by Geely. By contrast, Tata take-over of Land Rover/Jaguar produced no similar effect, because India is not seen as negatively as China in the minds of western consumers. The biggest beneficiary of this country branding has been “Japan”, where all things from Japan are seen positively and this benefits Japanese companies greatly.
So if China actually hopes to move past selling $10 shoes to start selling $20K cars, $200 million jets, and $20 billion bullet trains, then China needs to start improving its country’s image greatly, but I can see that you and Chinese public just don’t care how they are seen outside.
The West is afraid of China taking over the world. The Whites don’t see India as a threat to their world dominance as yet, thus no current smearing campaign on India from the western media. If Korea was a larger and more powerful country, don’t you think the western media would have already started its Korean-bashing attacks long ago?
I don’t think many people are afaid of China taking over. Most people still see China as a third world country of cheap labor. Everyone knows China is a long ways off from taking over the world.
@ Kimchi_Stinks
> The West is afraid of China taking over the world.
The West isn’t afraid of China taking over the world. If you thought the word “China” inspires fear in Westerner’s mind, you are sadly mistaken. It’s not fear, but something else that I cannot mention.
> The Whites don’t see India as a threat to their world dominance as yet, thus no current smearing campaign on India from the western media.
Because there is nothing to smear. India is a democratic country with innovative engineering. India doesn’t harm anyone else on earth.
> If Korea was a larger and more powerful country, don’t you think the western media would have already started its Korean-bashing attacks long ago?
No. Western media doesn’t attack Japan; even Japanese whaling and blue fin tuna fishing is overlooked, and Toyota still sells in spite of current massive controversy. Why? Because Japan’s image is extremely positive. The other extreme end of this is China, which probably has the worst reputation of all.
Comments closed – every thread returns to the same old nationalism.
Grow up, or get out.