Chinese JVs like to build native sub-brands

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everus1 300x169 Chinese JVs like to build native sub brandsAll the while, native brands always belong to Chinese native car makers, such as Chery, Geely and BYD. In recent months, some joint venture brands released their own native sub-brands.

In April of 2008, Guangqi Honda, a JV between Guangzhou Automobile Group and Honda Motor, unveiled Everus (Li Nian in Chinese), the first native brand of Chinese JVs at Beijing Auto Show. Following some impressive concept cars for various auto show debut, the final production model S1 was unveiled at Guangzhou Auto Show this month. Everus S1, based on the last generation of Guangqi Honda City/Fit Saloon with few changes, will go on sale in early 2011.

SAIC-GM, a JV between Shanghai Automotive Industry Corporation and General Motors, started late, but moved fast. On July 18 2010, SAIC-GM-Wuling, a SAIC GM’s branch in West China, released its native sub-brand Baojun with a meaning ‘great horse’. 4 months later, the first Baojun 630 passenger car rolled off the line at SGMW. The Baojun 630 is based on the old SGM Buick Excelle (Chevrolet Excelle in Europe). It will also go on sale in early 2011.

The relationship between JVs and native makers dates back to 1995. At that time, FAW began to assemble Hongqi CA7220 based on Audi 100 with the permission from its partner Audi, to revive China’s first native car brand. After that, FAW assembled different models of Hongqi and Besturn based on Lincoln Towncar, Mazda 6 and Toyota Crown. In addition, Changan, BAIC and some other state-owned enterprises have brought partners’ platforms for native brands as well.

However, Everus and Baojun are different. They are brands belong to the JVs rather than the Chinese partners. With old but mature platform, the mission of JV’s native sub-brands is to enter the low-end market, fighting against Chinese ‘real’ native brands.

China is a multi-dimension car market. Unlike Europe and American, China’s each car segment also can be divided into various markets. For example, in A-segment, FAW-VW provides various markets with up to 4 different models. The high-end Sagitar (Jetta A5) and Golf A6 are mainly for metropolitan consumers, the low-end Jetta A2 aims at towns and villages, while the New Bora A4 focuses on the mid-market.

It is beyond doubt that to maintain market share, the old Jetta A2 and Santana B2 have also damaged VW’s brand image seriously. VW have paid much for it. But thanks to the native sub-brands, Guangqi Honda and SAIC GM will never face this problem. JV’s low-end native sub-brands may become a new trend of Chinese auto industry. Chinese ‘real’ native brands will have to be alert in 2011 and will have to move fast to counter their new ‘enemy’

About the author  ⁄ Gong Zai Yan

Gong Zaiyan is a researcher at the Center for Automotive Industry, School of Automotive studies, at the prestigious Tongji University.Going Zai Yan focuses on the study of the green vehicle industry in the Chinese market, he also focuses on policy and regulations in the overall market.

2 Comments

  • TheK
    January 10, 2011

    Buick Excelle = Chevrolet Nubira or Lacetti in Europe :)

  • woxihuanpijiu
    January 10, 2011

    Nice article Gong. Not too sure if I agree that the older generation Jetta’s and Santana’s have damaged VW’s image though. It wasn’t that long ago that the Jetta and Santana were tier one vehicles so looking back in a few years from now people will see those two vehicles as doing more to get the industry started than any others.

    The intriguing thing here is that while many other countries automotive output is for the export market the JV’s are turning their attention to the domestic market instead. 2011 will be a very interesting year for the industry in China.

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