Imported passenger vehicle sales increased by 27% over the course of 2011 and according to figures from China Automobile Trading Company (CATC), one of China’s largest dealers of imported cars, sales of imported passenger cars in 2012 are likely to exceed one million units for the first time.

2010 was the first big year for Chinese auto imports where sales reached 770,000 units, an increase of 93% over 2009′s figures. CATC believes that the appreciation of the Chinese Yuan and also the debt crisis in Europe has pushed automakers to place a greater focus on the Chinese market, and thus have stepped up the importation of foreign made models into the Chinese market.

Although 2010 saw a massive increase in the number of imported models into China, 2011′s sales figures slowed somewhat and are expected to slow again in 2012 and should see growth of 20%. CATC believes that models such as SUV’s are easier to sell with long lists of customers waiting for cars, but other models such as the flagship VW Phaeton has massive discounts and are still selling relatively slow.

Chinese auto exports are likely to be ramped up in 2012 and could potentially see sales of 500,000 to 600,000 cars being sent out of China, but the Chinese market remains in a strange situation where it imports more than it makes, where as other strong automotive countries export far greater volumes than they consume.

FrankF

Frank entered the automotive industry via his father's instructions. He grew up with cars around him, especially as his father was a major auto restorer, Frank's childhood was spent passing beers, tools and coffee to his father whilst he explained the ins and outs of engines. Frank now works in the Chinese car industry at a specific manufacturer.

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SAIC’s own sub brands, MG and Roewe, saw a sales drop of 45.34% in January with total sales reaching just 11,001 cars in the first month of the year.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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Buick’s Chinese sales were up ever so slightly to 71,056 units sold. The original Excelle saw sales of 28,680 units whilst the newer XT and GT models sold a combined 19,787 units, showing an increase of 21.1%.

Chevrolet sales continued to be strong, with the Chinese designed and developed Sail selling just over 18,000 units and the Chevrolet Cruze bursting through the twenty thousand barrier with 22,711 cars being sold.

Cadillac’s sales were largely buoyed by the SRX, sales of the SRX reached 2,132 units and total Caddy sales being just 2,987 units.

Wuling continues to be the star of GM China’s crown with 106,573 units sold thanks to the Sunshine minivan, which was the best selling bread van for the 9th year running in 2011, the Sunshine minivan accounted for 47,137 sales in January. The Baojun 630 which was developed in house with GM and Wuling saw sales of 9,006 units.

The Chinese new festivities are likely to cause a large number of auto manufacturers to produce lower than expected results in the opening month of 2012, February is likely to see an improvement on these figures but the end of the first quarter will be the real indicator where the market is heading in 2012.

FrankF

Frank entered the automotive industry via his father's instructions. He grew up with cars around him, especially as his father was a major auto restorer, Frank's childhood was spent passing beers, tools and coffee to his father whilst he explained the ins and outs of engines. Frank now works in the Chinese car industry at a specific manufacturer.

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The chances of the Chiense government introducing new policies to stimulate the auto market in 2012 are relatively small at this stage, traditionally new policies would be introduced in late November and enacted on January 1^st of the new year or following the Chinese new year, until now no new policies have been introduced.

The Ministry of Information and Resources Director Mr. Xu Zhang Ming believes that second and third tier cities will be major growth opportunities and in 2012, although major growth in this sectors could be ruled out owing to the quality and condition of the roads. Mr. Xu was speaking at the recent 2012 China Automotive Research Summit in Beijing where he announced that he believes the Chinese market will see 10% growth in 2012 in certain areas, highlighting MPV and SUV segments as potential areas for growth.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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The sales figure includes Dongfeng and Zhengzhou joint ventures and also Nissan’s Infiniti business. The Dongfeng-Nissan joint venture reportedly hit a new record with strong growth seen across the JV’s product line.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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At that time, Hong Qi cars were designed for the government but Shanghai branded vehicles were apparently China’s answer to the people’s brand.  So why have SAIC suddenly planned to revive the brand after such a long hiatus? A new policy issued by central government has mandated that government cars for mid level officials should be capped 180,000rmb and be of 1.8L or smaller displacement, previously it was 2.0L and 250,000rmb which gave officials a massive amount of leeway in buying their own cars, the new policy is expected to see more Chinese branded cars being purchased by government officials.  By reintroducing ‘national’ brands such as Shanghai, Beijing, and Hong Qi, Chinese manufacturers hope to win a greater share of sales from Chinese government fleets at all levels.

The first Shanghai branded vehicle is expected to be the R95 which was seen several days ago, in addition Beijing Auto’s first Beijing sedan will launch at the Beijing Auto Show in April this year and the Hong Qi C301 will launch at the same time.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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China has just entered the year of the Dragon, a powerful symbol of power and strength, also the number 8  is an auspicious number in China representing luck, thus 88 is doubly lucky. The Dragon88 will be officially unveiled in April this year at the Beijing Auto Show and will be a focal part of the company’s sales plan in 2012, however only 88 Dragon editions will be made available for the Chinese market this year.  The Dragon88 edition will be made available on the DBS, Virage, V8 Vantage S models  

Three exterior colors have been chosen to represent rich and vibrant Chinese art and history, interior colors will feature bright metal work and piano black trim. Consumers will be able to choose from a pallete of three interior colors for their Dragon88 models, Amethyst Red which represents wealth, peace and protection, Volcano red which has been chosen to represent the dragon’s fire, Champagne Gold has also been selected to represent the dragons status and prestige along with wealth and fortune.

The  most  striking  interior  feature  is  the  headrest  embroidery  design,  inspired  by Beijing’s famous Nine-Dragon Wall in Beihai Park. Built in 1756, it is one of just three of these famous decorative screen walls erected at Palaces and Gardens during the Qing Dynasty. The headrest design is based on the left-most dragon on the Beihai wall, its sinuous form rendered using four thread colours – Metallic Gold, Cream Truffle, Winter Wheat and Kestrel Tan.

Bang and Olfsen speaker and headphone system have been installed in Dragon88 editions for when the driver owner doesn’t want to listen to the rip roar of an Aston Martin engine. A new 10 spoke alloy have been designed for the Dragon88 with a special silver finish, behind each alloy wheel black brake calipers have been installed as standard.

Aston Martin currently has 7 dealerships in the Chinese market, although with 2011 sales expanding at a rapid pace the British company is expected to advance aggressively within the Chinese market in 2012. Bentley’s own Dragon edition car was sold out before the cars even made it to the market, which indicates that there is still a strong demand for super luxury cars in the Chinese market even though the economy is going through a cooling down period.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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The first concept car is expected to be unveiled at the Beijing Auto Show where it has been called the GOLF, golf of course standing for Green, Oxygen, Light, and Friendship. The GOLF concept was designed and developed by Daimler-BYD in a 50:50 joint venture which has total investment of 6 billion RMB. As a pure EV brand the Daimler-BYD cars will be up against BMW’s i3 and i5 range of cars when they finally launch.

The initial concept versions that leaked to the internet indicated that the GOLF would come with a slight hint of Mercedes B200 and also a dashing of BMW 5-series GT around the rear, however neither of these attributes can be seen in the above road testing vehicle. We don’t know too much about their first car, although the Beijing Auto Show will play host to the brand unveiling, we’ve since learned that the new car will carry a tear drop or rain drop like logo when officially launched.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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From Reuters:

Chinese group Zhejiang Youngman Lotus Automobile has made a fresh bid for Swedish carmaker Saab, which went bust in December, Swedish radio reported on Thursday, citing sources.

Saab, one of Sweden’s best-known brands, shut down production early last year after running out of money and was finally declared bankrupt after protracted rescue efforts by owner Swedish Automobile.

The public broadcaster said Youngman’s offer was worth several billion Swedish crowns, and the Chinese firm, which had wanted to invest in Saab before the bankruptcy, would under the new proposed deal produce cars at Saab’s factory in Trollhattan in the southwest of Sweden.

Saab’s receivers declined to comment on the report. A Youngman representant was not immediately available for comment.

A key stumbling block that led to Saab’s bankruptcy was the refusal of its former owner General Motors to allow its technology, which underpins Saab cars, to fall into Youngman’s hands.

FrankF

Frank entered the automotive industry via his father's instructions. He grew up with cars around him, especially as his father was a major auto restorer, Frank's childhood was spent passing beers, tools and coffee to his father whilst he explained the ins and outs of engines. Frank now works in the Chinese car industry at a specific manufacturer.

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Information leaked to the Chinese automotive press indicate that BYD will be attaching their new self developed dual clutch technology to the S6 in the early parts of 2012. The DCT will be paired to both the 2.0L and 2.4L offerings, the 2.0L engine is BYD’s own design whilst the larger 2.4L is a Mitsubishi donor model.

Pricing is expected to be still relatively low despite the advanced gearbox technology, pricing could potentially be from 120,000rmb and rising which is a steal considering the size of the S6.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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An anonymous source was quoted by Yi Cai saying that FAW’s flagship luxury models had become the defacto cars for ministers, as a result FAW shares lurched forward 1.9% to 9.14rmb per share on the Shenzhen stock exchange before retreating to 9.02RMB.

Hong Qi’s forthcoming C131 is being called an ‘Audi Killer’ by the Chinese press, although it is likely that this model is either based on an Audi or Toyota platform, Hong Qi cars have used both platforms previously.

Should Hong Qi become the ministerial car of choice once again, sales at Audi are likely to be impacted slightly but Audi have long been proactive in widening their consumer base away from the traditional government fleet, this seems like a storm Audi are able to weather very well.

See our stories on the C131′s development below:

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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Suzuki are aiming to push the Vitari’s into production in China over the course of 2012 according to media reports, with the cars being built locally Suzuki will be able to lower the costs considerably and pass on savings to end consumers.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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Mulroney came out to explain that Canadian ministers are limited to just $32,400 for their car, presuming this is Canadian dollars this roughly translates into just over 200,000RMB via Google. So how much does a Camry Hybrid cost in China? Prices of the last generation model were over 300,000RMB which is clearly well over the 200k limit imposed by the Canadian government, so perhaps the Camry in question was brought over from Canada. Either way, Ambassador Mulroney should be a template from which Chinese government officials can learn from. As mentioned earlier, Chinese netizens were in shock to learn that an Ambassador would drive a mere Camry, one netizen commented: “Shit, even in my village the leaders have VW Passat’s“

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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Next Generation BYD F3 Su Rui

BYD’s rise to fame came on the back of the original F3, the F3 got Chinese consumers onto the roads in a major way in 2010 and became a ‘peoples car’ so to say. BYD’s policy of trying to make everything in house, from glass to dashboards to carpet became the unsticking point of the F3, in a rush to make as many as possible build quality suffered, complaints rose and sales sunk. Now the F3 is back as the Su Rui and seems to be a world away from the original F3.

According to media reports the Su Rui has been completely redeveloped from the ground up, including new engines, a vastly improved platform and of course the new design style that is slowly propagating its way through the BYD line up. The F3 is likely to change BYD’s fortunes when it is finally revealed and launched at the Beijing Auto Show in April this year. According to reports the F3 Su Rui is likely to make the most of a new 1.5T engine and also dual clutch gearboxes both of which were designed in house, the cars interior has also been given a make over. Spec sheets indicate that features such as reversing sensors will come as standard, although GPS/DVD systems will be optional extras.

BYD’s new design them has moved on from the blandness of yesteryear and give the company a new edge that wouldn’t make the F3 and F6 look out of place in Europe or North American roads.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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The global OEMs and their Chinese JVs are selling pretty much everything that they can build or ship in. For example, Porsche expects to be up 62% this year, primarily as a result of removing a supply constraint for the Cayenne. But some of the domestic Chinese OEMs are seeing absolute volume falls and their share of the market has declined materially over the past decade.  What has gone, or is, wrong? How can this have happened in a control economy that is so regulated?

It is instructive to look back at how the Chinese car market has developed and how it has influenced the global OEMs. It’s very much a case of a number of highly-distinct phases, although in this review I will be deliberately vague about the timing of each phase, since the line is blurred by different companies developing at different speeds.

The lost years

It wasn’t so very long ago, up to the mid-80s, that the Chinese car market was less than 10,000 units and unless you were a very senior government official or a foreigner, the chances of securing a car were very thin indeed.  China had, to all intents and purposes, lost touch with the skills of mass manufacture, never mind about how to develop modern cars.  The demand simply wasn’t there – or, more pertinently, wasn’t allowed.  The products were stuck in the 50s. The market was at least consolidated with FAW making the Hongqi, Shanghai Auto the eponymous Shanghai and then a few truck makers such as Dong Feng, Chang’An, Chongqing etc.

The early years

In 1986, the auto industry was chosen as a pillar industry and accorded special status.  Multi-year plans were published, known as the 5-year plans (although they were rather longer-term in fact). Foreign OEMs were allowed, and encouraged, to form 50-50 joint ventures with domestic OEMs; although they were slow to get going.  Initially, the only significant ones were Jeep, FIAT and VW.  At the same time, globally, the dominant trend was offshoring.  While entire vehicle manufacture didn’t move to China, many of the component makers started offshoring to China, India, Thailand etc to take advantage of materially-lower labour rates and this (and other factors such as the Japanese OEMs) in turn led to globalisation of components, platforms etc.  In one of those wonderful unplanned consequences, it made the international OEMs more competitive and kicked off an era of cost downs.

Early growth

As the Chinese market took off, in the early 90s, so did the JVs. Capacity expansion was promoted and domestic brand development encouraged.  Everybody, both Chinese and global OEMs, wanted to join in:  GM, Nissan, Ford, Audi, BMW, Toyota, Honda etc all came to China and formed JVs.  This drove further consolidation in the West to an extent, although more within OEMs than between them.  In the meantime, a plethora of private manufacturers had appeared and, without wishing to be indelicate, some of them simply copied foreign cars.

The WTO years

At the end of the decade, China applied to join the WTO, introduced a range of more liberal policies and growth exploded. As the next 5-year plan came out, regulations tightened a little bit, the pressure to share technology grew, China moved towards owning intellectual property (“IP”) and the extent of the JVs deepened.  The million-car platform became the order of the day and if you didn’t have significant Chinese volume, life was tough.  Towards the end of this phase, there were Chinese OEMs that were very significant in scale; extremely competent at making cars but, and it’s a big but, making other OEMs products.  In this phase, we saw the first overseas acquisitions of foreign OEMs by Chinese OEMs:  Shanghai / Rover MG; BAIC / Saab assets; and Geely’s astonishing acquisition of Volvo from Ford.

Premiumisation

Revolting word, but it captures the theme.  All of a sudden, China was a 10m unit market and went from wanting mobility to wanting brands.  BMW, Mercedes, Audi, Jaguar Land Rover simply took off in China. Premium sales today are 30 times what they were in 2000. The Chinese consumer ‘got’ premium and wanted it now. China became a material profits driver for some: for the German premium OEMs perhaps as much as 50% of profits and for GM, China has probably exceeded 100% of its profits and before its insolvency was probably the only profitable part of the business. We are even seeing the beginnings of an IP legislation that has some teeth and so in a 600-word version of a much more complex tale, we have arrived at the current day.

So what does the Chinese Auto industry look like today?  There are many counts, but 77 domestic OEMs is the best estimate I’ve seen with revenue of $287bn spread over 13.9m units, 682 models and about 500 platforms.  The average Chinese OEM offers nine models and produces 20,000 units per model.  Critically, this all includes JV output.  Take that away and it looks even worse.  Chinese OEM revenue per platform is around $0.5bn; compared with, say, VW around $12bn.  Chinese policy is worsening this situation by forcing JVs to add a JV-owned brand product to the line up.  Just what China needs:  more models and more brands!

The overall market, by value, is 25% Chinese OEMs; 70% JV OEMs and 5% imports.  The domestic share has shrunk from 40% a decade ago.  The majority of the Chinese OEM vehicles are in the A & B segments, and they compete almost entirely on price. Meanwhile premium has grown to 17% of the market.

What are the trends in today’s Chinese auto market?

• Owner drivers.  I was struck, at a friend’s wedding in Shanghai recently, to see a young married couple arrive in a Panamera.  Very glossy and so far, so Shanghai, but there was no one in the back – they drove themselves.  Labour costs have driven up the cost of chauffeurs; and car ownership is spreading further down the wealth spectrum, so China today is no longer a purely-chauffeur market.
  This raises all sorts of interesting questions around the touch and feel, handling and infotainment preferences of a Chinese owner-driver compared with a western driver?  We don’t know the answers yet, but they will have views, and those views will start to drive car design globally.
• What happened to China being a sedan market?  When I was last in Hangzhou, I would say one-third of the cars not only are driven by the presumed owner, but are small hatchbacks.
• Regulatory pressure on fuel consumption.  Note, not CO₂ as in the West, which a cynic like me might note as purely tax-driven.  China will have to import any incremental gasoline that it uses; and that’s a strategic security risk which China doesn’t want to take on, so this not a cynical tax game; it’s a real issue.  We ain’t seen nothing yet on fuel consumption regulations in China.
• Further premiumisation (sorry, that word again). Already 17% of the market, and is expected to grow to 25% by the end of the decade and its all foreign OEMs; none of it is Chinese-branded.  . There has been some very interesting work done recently on the price discount that domestic brands suffer over imported brands.  Its at least 30% on a like-for-like basis never mind about adding “premium” on top of that.  That’s crippling!
• Exports: struggling domestic OEMs trying to drive volume through exports.  To Iran.  I’m not aware of any country / industry becoming competitive through exports:  successful exporters have been strong at home; and have taken those successful products abroad.  Exporting based on price needs a sustainable cost advantage….
• Costs:  China is no longer a cheap place to make cars.

So where does this leave the domestic OEMs that we started with?  The simple answer – in trouble.

• Costs are spiralling – I can remember when advising on the Shanghai / Rover MG deal that skilled labour was at risk of getting to $1 a day.  It’s eight times that now, which challenges the whole labour-driven model. VW has stated that its Slovakian factory is cheaper than its Shanghai ones;
• Quality is great, really it is.  I like nice, tight shut lines; but it comes with a cost.  To achieve the relentless consistency that modern car manufacturing demands, you need machines.  That means that the factories look much like western ones; cost the same; and labour falls to less than 10% of the cost, although you need more checking in China, so that offsets the slim cost advantage that you thought you had in China;
• R&D.  I’ve heard various estimates of the number of Chinese OEMs, but lets stick with the 77.  BMW spends more on R&D than the top 10 Chinese OEMs combined spend outside their JVs.  So does Daimler, VW, GM, Ford, Toyota, Honda, Hyundai etc etc.  Even Porsche spends more than the top ten Chinese OEMs in absolute terms. The Chinese OEMs aren’t catching up either. They are falling further and further behind.  Making a 2-litre gasoline engine produce 200 bhp isn’t so hard; but making it do that and 140g CO₂ with acceptable noise, vibration and harshness (“NVH”) characteristics, bulletproof reliability and 100,000-mile plus durability is really, really tough. Their engines are mostly designed by AVL and Ricardo.  They are stuck at the assembler stage and are a long way from being effective integrators let alone developers.  The Chinese OEMs spend a smaller percentage of a much lower sales value on R&D, leading to pitiful results.
• Brands.  This, frankly, is the biggest issue.  There are two global auto brands owned by China:  Volvo and MG.  That’s it.  It has taken Toyota 20 years to establish a second-rate US premium brand (Lexus). The reality is that there are four global premium brands (plus the super premiums like Ferrari etc):  Audi, BMW, Jaguar Land Rover and Mercedes.  That’s what consumers want to own.
• Component suppliers: not one of the global auto component leaders is Chinese, whichever segment you look in.  There are large ones, such as SAIC’s component business but no scale leaders.  None with class-leading technology.  Increasingly, they are losing their cost advantage.

Put all this together and I simply don’t see how with fragmented R&D, smaller volumes, lower price points, and an uncompetitive parts supply chain that this industry can compete on a global scale without fundamental restructuring (and, given that M&A is my day job, a bit of that as well).

What’s wrong? The JV concept is flawed.  Western OEMs are not going to share their technology if they can possibly avoid it.  Not now, not ever.  Sharing means creating a competitor – why would you do that?  I know that GM has been forced to do so as a result of its insolvency, but waiting for your JV partner’s insolvency isn’t a strategy you can plan an industry around.

There are far too many OEMs in China.  The National Development and Reform Commission (NDRC) has recognised this and published its list of consolidators, but nothing that I have noticed has happened.  China will never, ever catch up on R&D, let alone pull ahead until there are, say, three Chinese OEMs, each of which is spending more than the major western OEMs on its own R&D.  Modern cars are very complex and while it’s relatively cheap to catch up, copy, call it what you will, it’s really, really expensive to develop original new technology that meets all the varieties of legislation around the globe.  Mahindra did a great job developing the Scorpio for $150m; it was highly fit for purpose and quite correctly based on simple tried-and-tested technology.  The market loved it, but I doubt Land Rover lost a wink of sleep; and I can’t see Mahindra being able to develop a new Range Rover competitor for anything but a factor of that.

Exports.  Forget about it.  If you aren’t competitive at home, you won’t succeed abroad, and I don’t count places like Iran.  Price is not a long-term strategy unless you have a sustained cost advantage.  China doesn’t.

Bluntly, I think China needs to control more premium brands.  That’s a wonderfully vague statement but you only have to compare, say, BMW’s margins with any of the mass-market manufacturers and it’s very hard to argue with.  Of course, the Chinese state could go on subsidising the industry for the 40-50 years it takes to develop a premium brand but I can’t see that happening somehow.

If this sounds critical of the planning behind the Chinese car industry, it’s not meant to.  I’m awestruck at the progress that’s been made in the last decade even, never mind about the turn around in a remarkably short period from what I dubbed the “early days” of the mid-80s.  It’s never been done in such a short time period anywhere else in the world.  Amazing.  It’s just that the industry is at a turning point where the structure which has served it well to date isn’t right looking forward. So China needs the boldness and the vision to implement some of the changes that it has already presaged; and, in some areas, go further still.

I can’t wait and I only hope to be able to play a small part in it, as I have to date.

Meyrick Cox is a Managing Director at Moelis & Company, an independent global investment bank that provides financial advisory, capital raising and asset management services to a broad client base including corporations, institutions and governments. Mr. Cox has more than 25 years of investment banking experience representing the world’s largest automotive and industrial companies across a broad geography including Europe, Middle East, Africa, India and China; in particular he has been involved in the creation of six of the Chinese Auto Joint Ventures (JV) and almost all outbound Chinese Auto Original Equipment Manufacturers (OEM) acquisitions. Automotive PR, a global service provider, facilitated Mr. Cox’s appearance at the Global Automotive Forum in Chengdu China in October 2011. This article is in part based on his presentation.

Meyrick Cox

Meyrick Cox is a Managing Director at Moelis & Company, an independent global investment bank that provides financial advisory, capital raising and asset management services to a broad client base including corporations, institutions and governments. Mr. Cox has more than 25 years of investment banking experience representing the world's largest automotive and industrial companies across a broad geography including Europe, Middle East, Africa, India and China; in particular he has been involved in the creation of six of the Chinese Auto Joint Ventures (JV) and almost all outbound Chinese Auto Original Equipment Manufacturers (OEM) acquisitions.

The interview between Thoughtful Media and Ford’s Vice President of Distribution, Nigel Harris gives some clear insights on how Ford reaches consumers and how it reels them into the brand. Although Ford’s sales lag behind GM’s sales, Ford is very pro-active in reaching potential consumers via traditional print media, social media and internet advertising. Having met Nigel myself a few years ago in Chengdu I can confirm that he is more than up to the task of clearing Ford dealerships of Ford vehicles.

Before Ford launched the Ford Fiesta in the Chinese market Ford sent out its high up executives to follow various ‘mei mei’ around town, (mei mei of course being the term for a young girl), before this sentence takes a turn for the worst Ford’s goal was to better understand the target audience for the Fiesta ahead of its launch as well as small car buyers in general. Ford wanted to have a greater understanding single, independent, female executives with an income of around 1500USD per month. Judging from Fiesta sales over the course of 2011, it seems that Ford’s homework really paid off, the Fiesta was one of the better selling small cars last year although it did face some strong competition from newer models over the course of 2011.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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So, enter Ford’s Kuga. The Kuga is somewhat larger than the Tiguan and is powered by the choice of a 1.6T and a 2.0T, the same 2.0T that is found in more prestigious vehicles such as the Volvo XC60 and Range Rover Evoque. Ford’s Chinese sales have been somewhat muted when compared to its rival, GM, but of course GM has multiple brands to play with in the Chinese market where as Ford only have one – they did try to introduce Lincoln via the Navigator but sales were low. Ford’s China sales grew to 519,390 units in 2011, on the other hand Chevrolet sold 595,068 units and 645,537 Buick’s were sold over the same period, Ford’s China line up is just five models, four locally made: Fiesta, Focus, Mondeo and S-MAX with the Edge SUV being imported from Canada. The introduction of a larger than the Tiguan compact SUV but selling in the same price range (200,ooormb – 300,000rmb) is likely to upset the market in a major way and will likely make the Kuga Ford’s biggest seller in the Chinese market in the next 18-24 months.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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From AFP:

Chinese automaker Great Wall Motor will open on February 21 a plant in Bulgaria, producing the first Chinese cars assembled in Europe, its local partner Litex Motors said Thursday.

The plant in the northern village of Bahovitsa near Lovech has been test-producing since mid-November. It has a planned annual capacity of 50,000 cars for the Bulgarian and European market and will employ up to 2,000 people.

The company also launched already its official advertising campaign in European Union member Bulgaria for the three models to be made here — the Hover H5 SUV, the Steed 5 pick-up and the Voleex C10 city car.

Litex Motors and Great Wall Motor, one of China’s leading maker of sports utility vehicles, signed the contract for the plant in 2009.

It will first assemble cars from Chinese-imported parts but Litex Motors said recently it was in talks with different subcontractors to gradually organise the production of some parts in Bulgaria.

Expert Ferdinand Dudenhoeffer from the Center for Automotive Research in Duisburg, Germany, said Great Wall had every chance to sell well in eastern Europe.

“Within five-six years, they will reach five-percent market shares in eastern European countries,” Dudenhoeffer told AFP, adding that Great Wall would open the way for other Chinese carmakers to come to Europe.

“This will be a new competitor on the Bulgarian market… But it is not bad to have a carmaker in Bulgaria,” Renault-Nissan’s Bulgaria CEO Bernard Neuviale also told AFP at the launch of their new Renault Twingo here Wednesday.

Great Wall cars would not directly threaten the sales of Renault’s Romania-made Dacia, he predicted.

“Great Wall will first have to prove many things — in the first place that it can produce here a car of good quality and then we’ll see. Their prices are also not so good,” Neuviale said.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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Porsche’s solution is to build its own track near Shanghai, at least according to a German media outlet Faz.net. The German’s are saying that the proposed track will be similar to Porsche’s own testing track in Leipzig. The Leipizig track is an F1 track but hasn’t seen an F1 race since 2002, and now serves as a Porsche internal testing track and as a hospitality track where Porsche owners, potential owners, and race fans can be thrown around the track either at the wheel of their own Porsche or with a driver.

Shanghai already has multiple race circuits of its own – the Tianma Race Track and of course the official F1 track which is known as the Shanghai International Circuit. Porsche’s have raced on the F1 Track plenty of times during the Porsche Carrera Cup races which are the somewhat boring precursor to the F1, and Porsche does use the Tianma circuit amongst others in China for its driving schools, so why build a new one? Porsche’s China success is built upon the back of the Cayenne SUV which account for the majority of its sales along with the Panamera, sales of traditional two seater sports cars have been quite low so far due to the lack of a true sports car culture in China, the most obvious way to boost sports car sales is to create a culture around them and the best way to do that is if you have your own Porsche test track.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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Audi’s 2011 sales results were just over 300,000 units – a new record for the four ringed German company, growth within the first eight months of 2011 was 37.4% greater than the same period in 2010 which has set Audi on a goal to sell 1 million cars in the next three years.

Audi introduced the A1 and A7 Sportback into the Chinese market in late 2011 and expects them to perform well in 2012, in addition Audi will launched a new Audi A8 in China also the R8 Spyder, a further 6 models will reach the Chinese market bringing total models to 12 new cars in 2012. JD Power results also indicate that Audi consumers are also the happiest car owners in the Chinese market.  In 2012 Audi will introduce the new Audi A6L as a locally made product and will also introduce the imported Q3 as well as Q5 hybrid and also RS sports models.

BMW’s 2011 sales were the German company’s best ever. Sales on the mainland reached over 230,000 units which was an increase of 37.6% with BMW branded models accounted for over 210,000 (an increase of 37%), MINI also sold 15,518 cars which was an increase of 47.7%. For BMW, China became its third biggest market.

Chinese car dealerships run on a 4S principle, the four S’s standing for Sales, Service, Survey and Spare Parts but BMW have introduced a 5S service – which includes Sustainability. BMW are aiming to trade off their high standard of service in 2012 by bringing more people into the BMW fold on account of their strong after service. Future flagship 5S stores will come with 22,000 square meters of land which will be used in repair, maintenance, and of course sales, the new 5S stores will come equipped with their own power generation equipment including solar power, wind power and other clean energy sources.

2011 was a good year for Geely owned Volvo, in nearly all of its markets Volvo so good growth, by 2020 the company aims to be selling 800,000 cars per year. In 2011 Volvo sold 449,300 cars world wide an increase of 20.3% over 2010, although Chinese sales reached a new high of 47,510 units Volvo is still obviously trailing behind its competitors, interestingly this made China Volvo’s third biggest market. The best selling vehicles in the Chinese market where the new S60 sedan and also the XC60 Crossover.

In 2012 Volvo will launch multiple new products in the Chinese market, the new V40 will make a splash in the first half and on the international scene Volvo will launch a plugin diesel hybrid as well as a plugin XC60.

Whilst not quite a luxury brand, the French marque Renault is widely regarded as being so in the Chinese market due to their rarity. Renault sales in December 2011 reached a new high of 3260 units which helped boost their end of year sales to 24,275 units – an increase of 65% over previous years. In 2012 Renault will expand its dealership networks to 80 dealers which will likely increase sales further.

Jaguar Land Rover also saw a record year in 2011, by the end of 2011 they had combined sales of 42,063 units, an increase of 61% over 2010. Jaguar’s sales jumped by 123% to 5976 units sold with Decembers sales reaching an impressive 945 units alone. Land Rover sold the majority of models with 36,087 units being cleared from dealer lots – an increase of 54%.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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Tax on cars has being going up in recent years, originally the ‘Yang Lu Fei‘ was used and then abandoned. The Yang Lu Fei which literally means ‘care for the road tax’ was paid monthly and went off the weight and no of seats in your vehicle, a 5 seat mini car paid around 100rmb per month, larger 7 seat vehicles around 200rmb. Eventually this was scrapped and rolled into gasoline prices which made for an easier system, car owners no longer had to pay a monthly tax and random roadside tax inspections ended.

The new tax system is called the Car and Vessel Tax, a clumsy name but nevertheless it is a much needed tax, tax is counted as follows:

(1) Taxpayers

Taxpayers include enterprises, units, individual household businesses and other individuals who possess and operate vehicles and/or vessels within the territory of the People’s Republic of China (excluding enterprises with foreign investment, foreign enterprises and foreigners).

(2) Tax base, tax amount per unit and computation of tax payable

Taxes for vehicles and vessels are calculated slightly differently:

a. For vehicles: 60 to 320 yuan per passenger vehicles; 16 to 60 yuan per ton ( net-tonnage ) for cargo vehicles; 20 to 80 yuan per motorcycle; 1.2 to 32 yuan per non-motorized vehicle.

b. For vessels: 1.2 to 5 yuan per net tonnage for motorized vessels; 0.6 to1.4 yuan per deadweight tonnage for non-motorized vessels.

So who is excluded from this tax? Of course government organs and military appliances don’t to pay, yes, the government with the largest fleet of vehicles in the world is exempt:

Tax may be exempt on the vehicles and vessels self-used by governmental organs, people’s organizations and military units; the vehicles and vessels self-used by units financed by financial fund allocation; the fishing vessels with a deadweight capacity not in excess of one ton; the pontoons and floating docks used exclusively for passengers, the loading or unloading of cargo and the storage of goods; the vehicles and vessels used by police department, fire department, health department and environmental department; the vessels subject to payment of Vessel Tonnage Tax according to Rules; special vehicles designed for the convenience of the handicapped; and the tractors used mainly in agriculture production.

What does this mean in the real world?

Taxes will look like this per year for automobiles in 2012:

• Sub 1.0L vehicles – 300RMB
• 1.0 to 1.6L – 420RMB
• 1.6 to 2.0L – 480RMB
• 2.0L to 2.5L – 900RMB
• 2.5L to 3.0L – 1,920RMB
• 3.0L to 4.0L – 3,480RMB
• 4.0L and above – 5,280RMB

Taxes will be collected by insurance companies on yearly premiums and will form the basis of all insurance policies in 2012. The new taxes are aiming to steer Chinese car consumers away from large displacement vehicles and into smaller more fuel efficient models. For example, the Ford Mondeo originally came with a 2.3L engine but later came with a 2.0L Ecoboost model, older 2.3L Mondeo’s will have to pay a tax of 900rmb but the newer more powerful Ecoboost models will be eligible for 480rmb of taxation. The big winners from this tax policy are those companies that already have a turbo powered models on the market, such as VW’s TSI range, Chinese manufacturers are playing catch up but the days of using off the shelf 2.4L Mitsubishi engines are over.

The vessel tax is not aimed at common small scale fishing vessels but at the rise of large yachts, the Chinese yachting industry has grown rapidly in the past few years as yachts have taken over cars as the number one way to flash your cash.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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Now the company is back selling MG’s once again, MG Motors took delivery of the first batch of MG6′s earlier this week. The 6′s were made in Shanghai and shipped to New Zealand in sedan and hatchback form, currently only the UK has the ability to manufacturer MG’s at its Longbridge plant, so NZ customers will be receiving Chinese made models.

Apparently MG New Zealand will be showing the new 6 at the MG National Rally.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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The problem here being a translation issue, the China Assosciation of Automobile Manufacturers (CAAM) did announce that the Excelle was the best selling car in 2011, however the problem lies with Buick’s naming system. In the Buick line up their are three Excelles, one is the older generation which was a Daewoo designed model and also had some Suzuki input, oddly it also had a Holden designed engine in the Chinese market, this older Excelle was known as the Kai Yue in Chinese and was facelifted in 2008 to bring it up to style, it currently only comes with a 1.6L model paired to an automatic and manual gearbox.

The second and third Excelles are known as the Ying Lang in the Chinese market, the hatchback is the Ying Lang XT whilst the saloon is the Ying Lang GT. Both are based on the latest generation of Opel Astra, the GT variant being the Buick Verano in the US market. So which sells better? Obviously it is the first Kai Yue Excelle rather than the newer versions which only share an English name.

A brief look at December 2011′s sales indicate that the Kai Yue outsells its rival XT and GT models by a large factor – 13,846 Kai Yue’s were sold (down 19.13% over Dec 2011 Figures), in the same month just 6,250 GT’s were sold and only 2,131 XT’s were sold in the same period showing that despite the massive upgrade in quality and style for the latest generation of Excelle’s, the old Kai Yue is still a strong seller and obviously a great gateway into the Buick brand. The Kai Yue may look like a limp fish amongst Buick branded Opel’s in Chinese Buick dealerships, but it is obviously holding the brand up high thanks to its low pricing, from just 100,000rmb ($15k USD) you can own a Buick, where as the XT and GT are priced high from 134,000rmb to 184,000rmb.

FrankF

Frank entered the automotive industry via his father's instructions. He grew up with cars around him, especially as his father was a major auto restorer, Frank's childhood was spent passing beers, tools and coffee to his father whilst he explained the ins and outs of engines. Frank now works in the Chinese car industry at a specific manufacturer.

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Opel’s current China line up consists of just the Antara SUV which is currently made on the same production line as the Chevrolet Captiva in Korea and imported into China, previously Opel sold the last generation of Astra, Vectra and Zafira in the Chinese market but sales never really took off, Opel’s 2011 sales stood at just 5,000 units in total. A proposed agreement with SAIC was reported via the Handelsblatt report, a German media outlet, on Tuesday afternoon, the outlet reported that SAIC are currently talking with Opel regarding a sales agreement which could potentially see the Opel China network expanded from a handful of dealerships to as many as 300 within the next few years.

It is hard to see where Opel could potentially fit in with GM’s China line up, would it be below Buick or above Buick? Would it sit in between Chevrolet and Buick? Obviously as Opel’s are largely European made and imported it will be difficult to hit mass market sales in the short term, but if models such as the Zafira, Zafira tourer and Corsa were made in China Opel might see some traction. GM China’s top man, Kevin Wale, said that GM are aiming to raise Opel’s sales by 10% in 2012. GM have so far been running with Cadillac at the top of the heirarchy with its luxury line up, Buick with the mid range as an affordable premium model and with Chevrolet picking up the economy and younger markets, of course Baojun was created to attract a new level of emerging customer, under this set up brands such as Saab and Opel were squeezed out of the Chinese market.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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Jason Plato and Andy Neate have been signed up as drivers for the new cars and will race under the MG KX Momentum Racing banner, Triple Eight Race Engineering have been tasked with making the MG6 GT up to Touring Car specification and will use the standard 2.0 Touring Car Engine.

MG’s last Touring Car win came in 2006 before the former company, MG-Rover, went into bankruptcy.

Picture from Auto Sport News.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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BMW will recall just 3,406 cars in the Chinese market,with the recalled vehicles including the Mini Cooper S, Clubman, Cabrio and Countryman models produced from March 2006 and January 2011, according to a statement on the website of the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ).

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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Ken Ma

Ken Ma recently jumped ship from SAIC to Chang’an, but recently jumped ship from Chang’an for reasons currently unknown. Mr. Ma was head of design at SAIC. When at Chang’an he was assistant to the Chairman of the group and also a vice leader of the research and design center. Although Chang’an is a Chongqing based company Ken Ma went out of his way to develop a Beijing design studio some 800 miles away from Chongqing, but as Beijing is the cultural and design capital of China it seemed like the best place to set up a design center.

Ken graduated from the Central Academy of Arts in 1990 and soon went overseas to continue his studies at Ohio State where he studied car design again. In 2000 he became the head of GM’s Asia Pacific Design center and oversaw the development of the last generation Buick Lacrosse. By 2007 SAIC had pinched him over to be their own design director, he worked on concept models such as the Roewe N1, Roewe 350, and MG5 final production model and also the Roewe W5, 750 and 550 facelift models, in addition to those he also worked on the World Expo models such as the Leaf.

In 2011 Ken went over to Chang’an where he strengthened their core Chinese development team and gave us a strong reason to believe that Chang’ans future models will be world class cars.  Why he left Chang’an still remains a mystery.

Wulin Gao Wa

Wulin is not just a pretty face, she has been at the forefront of product and auto design for a few years now, she recently took over the top seat at GM China’s Advanced Design Studio where she will be leading research into the habits and likes of Chinese drivers to further localize GM’s products for the Chinese market.

Wulin graduated from the same university as Ken Ma, The Central Academy of Fine Arts, in 2000 after graduating she went onto Germany’s Pforzheim University where she gained a masters degree in Traffic Design and worked part time at the then Daimler-Chrysler, by 2003 she had already moved onto Mercedes’ HQ in as the first Chinese female designer within the group.

In 2006 she returned to car design after taking a short break and also lectured at her old university on car design, in September 2011 she landed the top design job at GM China.

Peter Gong

Mr. Gong is not to be confused with China Car Times’s own Mr. Gong, although the two are equally dashing in appearance. Peter Gong is currently heading up PSA’s Asia Design Center, a much needed entity for the French company if they are ever going to have serious sales in the Chinese market. Peter graduated from Tsinghua University’s School of Industrial Design, later he went onto VW’s design center in Germany, and then BMW’s, as with Ms. Gao Wa Peter studied at Pforzheim University in Germany and later went on to work at PSA’s design center in France. When talking about Chinese designers and the situation in China, Peter was quoted as saying: “The nationality of a car designer is not the problem, the problem in China is that there is not a strong development for designers to further themselves. Manufacturers don’t understand local designers, and don’t have much confidence in their abilities, which leads to local designers having poor or little experience and thus creates a situation which is deadly towards a car designers career. “

For China, Peter has had his hands busy with designing the Peugeot 508 sedan which is one of the better looking sedans on the market currently and he also oversaw the design of the new SXC concept car which unveiled at 2011′s Shanghai Auto Show.

Zhang Fan:

The new A-Class is a Chinese car. Who would have thought it? The man behind the design is none other than Zhang Fan, a Sichuan boy born and raised. Zhang’s bio is a simple one compared to the above, after graduating he was hired by Mercedes Germany and worked there for 8 years, slowly being promoted from a simple designer to a senior member of the modeling team. Whilst at MB Zhang Fan developed the show stopping Mercedes A-Class concept car which was aired at the Shanghai Auto Show in 2011

After 8 years of working at Mercedes Benz, Zhang Fan took up his new position at Guangzhou Auto where he will be assisting with the state owned company’s new brand: Trumpchi. Whilst the name is hardly inviting the products have so far been well designed and well thought out, Guangzhou Auto bought an older Alfa Romeo platform from Fiat which they have put to good use within the Trumpchi brand and is now ready to sprout an SUV variant. One of Zhang Fan’s first concepts at GAC was the E-Linker electric concept car.

Cao Min

Cao Min is probably one of the more famous Chinese car designers, you just don’t know him. Cao Min developed the Buick Rivera Concept car which went onto become the current generation Buick Lacrosse. When coming up with the Riviera concept car Cao Min had a big plate on his hands, the first generation Riviera was a truly beautiful car but came worse with age, the eighth generation model was a showcase of GM’s design malaise over the past twenty years. Cao Min’s Riviera concept was unveiled in 2007 at the Shanghai Auto Show and gave GM fans the world over a glimpse of what the company could do, the Lacrosse was launched in late 2009 as a 2010 model in a post bankruptcy GM, the Lacrosse went onto become a major seller for GM in China and the USA.

Cao Min may look overly youthful but his resume indicates that he graduated from Shanghai Jiao Tong University’s School of Industrial Design  in 1995, in 1998 he was hired by GM Asia Pacific Technical Center as one of the first group of local designers at the center.Whilst at GM Cao Min had a hand in the design and development of the last generation Lacrosse and the Cadillac SLS (STS elsewhere in the world), which was the first time that a Chinese designer had been given the chance to develop a facelift for an international model.

Shao Jing Feng

As with Cao Min, Shao Jing Feng is one of the more low key Chinese designers, although the majority of readers will know his works.In 1999 Shao graduated from Jilin University’s school of automotive design, shortly after he entered Shanghai-VW’s design center where he worked on models of new cars, from 2004 onwards he became the chief designer at the center and was responsible for all of SH-VW’s car designs, including locally made models such as the VW-Lavida, Neeza and also breathed on the VW Tiguan for the Chinese market.

Part Two will come tomorrow.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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In addition to the new model Shanghai VW are also working on a new Santana to replace the decades old one that is currently on the market in China, the new SantanaNF will debut towards the end of 2012 and will likely be shown as a concept car at the 2012 Beijing Auto Show.

Currently Shanghai-VW’s Lavida is the only option that sits below the Passat, with pricing reaching the 150,000rmb segment it seems that SH-VW are wanting something to sit in the 150,000rmb-200,000rmb segment which would have slight over lap with the top model Lavida and the lower model Passat.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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When the Chinese auto market got its wheels spinning in early 1995 the market was spit down the middle quite evenly, you had a fairly constant 60-40 split of commercial vehicles and passenger car vehicles, in the early days it was companies buying trucks and government departments buying cars, later on as incomes improved regular citizens would buy cars as well. In 2005 passenger car vehicles outsold commercial vehicles for the first time and set the trend for the next six years. In 2011 the auto market received a bloody nose, auto sales growth increased by a mere 2.5%, the slowest it had been since the mid 1990′s and way behind the break neck growth rate seen in the previous five years. So what is exactly happening in China?

Many fingers have been pointed at the lack of low tax rates for sub 1.6L vehicles, in 2009 tax rates were lowered to 5%, then raised to 7.5% in 2010 and raised back to their pre-2009 rates of 10%

In 2011 sub 1.6L cars continued to see steady sales with sub 1.6L contributing over 9.83 million units to the total sales figure of 18.50 million cars sold last year, thus sub 1.6L cars stood for 53.2% of the market and saw an increase of 0.8% over 2010′s figure for sub 1.6L cars – showing that its not all about preferential tax systems.

Chinese branded cars sold 6.11 million cars in 2011, a fall of 2.6% and caught just 42.2% of the market, Japanese brands initially seemed to be ahead in the early years but have been caught up and over taken by Chinese brands. Of course the overall market situation is that foreign brands when clumped together dominate the Chinese market.

In 2010 the government introduced a fuel efficient subsidy of 3000rmb for cars that were able to meet fuel efficiency levels of 6.9L per 100km, for 2012 this no has been increased to 6.3L per 100km which will give Chinese manufacturers another hurdle to cross, however 148 cars currently meet this criteria.

4 car manufactures saw their production and sales jump over the 2 million cars barrier in 2011, in particular SAIC made nearly 4 million cars in 2011. Dongfeng, FAW, and Chang’an saw sales of 3.05 million, 2.6 million and 2 million units respectively, whilst their products accounted for a combined 11 million units and took 62.9% of the market.

CatherineQu

The original deal to sell Saab to Youngman fell through owing to GM not willing to let its IPR that Saab used fall into Youngman’s hands, as the same IPR underpins Buick and Chevrolet models in the Chinese market. This new deal will apparently get around the GM issue and allow Saab’s to be produced in China and Sweden. The previous deal saw a price of just 100 million Euro attached, so it is unclear why it has now jumped to 731 million USD.

Saabs United, a Saab fan site are currently mulling over the possibility of Youngman just producing the Saab 9-3 until the new Phoenix based products are made available. What about engines and all the other GM tech? Elsewhere people are pointing to the possibility of buying off the shelf engines from the likes of VM in Italy or Mitsubishi in Japan. But can Saab’s dealership network survive a two year lock down whilst it waits for new cars? It seems unlikely, and it makes Geely’s purchase of Volvo for 2 billion USD look like a steal in comparison. The 2007 launch of the MG7 in China ought to be a harsh lesson to anyone that thinks they can introduce old tech into China and pass it off as new.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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Chinese automotive exports have been long threatened but have not materialized, Western automotive media have been issuing ‘The Chinese are Coming!!’ headlines since 2003, but barely any Chinese cars have made it to Western roads in that time – aside from the London taxi, which ironically is now majority made in Shanghai and shipped to the UK for assembly, making it one of the first Chinese cars to hit Western roads in large numbers, the MG6 came in 2011 and threatened to sell 2000 cars in its first year but until now sales remain way below their initial sales targets. However, Western auto makerts are not exactly boom town targets for Chinese car manufacturers, they are more of a bragging right to other manufacturers in China to show that they have the ability to design, develop and sell cars that meet EU standards. The real growth market for Chinese cars are other developing markets, north, west, east, south Africa have been major targets, as have Middle Eastern ones but South America, particularly Brazil, are major targets. 2009 was a terrible year for automotive exports, the world was mired in a recession and only the Chinese market was seeing any sort of growth, thus exports were practically 50% lower than 2008’s figures, fast forward to the end of 2011 and export sales had practically trebled.

Chery was a major catalyst behind 2011’s export sales, the Anhui based company exported some 160,200 cars from its factories and saw export sales increase of 73%. Great Wall came in second with export sales reaching 160,200 units which saw export sales increase 50%. JAC saw the biggest sales increase of all Chinese auto companies, 2010’s export sales figures were just 21,600, by the end of 2011 these had grown to 66,300 units.

In 2010, China’s major export markets were Algeria, Vietnam, Egypt, Syria and Chile, by the end of 2011 a major change had occurred. With Algeria on the tail end of a people’s revolution and Syria being swept up in a similar people’s revolution, Brazil became a major precipitant of Chinese automotive products with 104,000 Chinese cars being sold in South America’s most populous nation. Chinese automotive analysts are saying that 2011 will be the automotive industries ‘Great Leap Forward’ in terms of a stronger focus on export sales to offset weaker internal markets.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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Since leaving BYD in August Mr. Xia has been unheard of, Zotye announced earlier today that they have hired Mr. Xia as their new CEO and will cover all of Zotye’s business matters in the future. Zotye are planning to rapidly expand their model line up in China and abroad with new models being launched on a more regular basis. Zotye will no doubt benefit from Mr. Xia’s experience within the industry, as well as the lessons learned from BYD.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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From China Daily:

Swedish delegation made up of government officials, representatives from the Swedish automobile company Saab was on the way to China on Wednesday for meeting the Chinese car manufacturer Youngman which is interested in purchasing Saab, reported Swedish media.

Senior officials from Vastra Gotaland region and Trollhattan city where the Saab company is located are on the delegation group. The meeting between the delegation and Youngman will be due on Thursday and Friday, said the Swedish newspaper Gothenburg Post.

“We are going to China to present what the region can contribute on the issue. We will do all that we can to get the best solution for Saab,” said Birgitta Losman, an official from the regional government.

According to Swedish Daily, the mayor of Trollhattan Annika Wennerblom will present her willingness and support for Saab to find a new owner.

Since earlier 2011, Saab had been trapped in difficult situation that production in Trollhattan, western Sweden, has stopped and wage payments have been late for months. A Swedish District Court approved Saab’s bankruptcy petition last month.

According to a statement from Saab’s parent company Swedish Automobile in Holland on Wednesday, four members have left the board of directors because they could not reach an agreement with the president Victor Muller on how to finance the parent company after Saab’s bankruptcy, leaving Muller as the only one in his board.

Ash

Ash came to China at 18 on a whim and never left. Some 10 years later he collected a degree and a family along the way and now focuses his time on watching the Chinese car industry develop. He has witnessed the market change from being minor backyard market in to the world's biggest and most important market for all car manufacturers. You can contact or connect with him via Linkedin by clicking the 'Website' link.

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