Newsletter 16 – 11th November 2011

Hi {name},

It’s hard to believe that we’re already 11 days in to November? Where did this year go? It’s also China Car Times Birthday, 5 years online today. Celebrations were admittedly quiet as I completely forgot about it – for the fifth year running. Shanghai is starting to get cold, it seems that Shanghai only has two actual seasons which revert around hot and cold, now we’re heading towards cold thankfully, the high’s of 38-40 degrees are not fun at all, but the zero degree lows are not going to be fun either. When Mao was building his new China in the 50′s, he decided everyone that lived below the Yangzte River did not need the excellent government supplied heating that everyone north of the Yangtze receives. This is my first winter on the south side, and it’s getting rough already. Perhaps I should move to the other side for winter?

Now onto the real news. This week saw the release of auto sales statistics for October 2011, it seems the market is having a slow break with sales having a slight breather with 1.52 million vehicles being sold in October. The usual stories of foreign dominance of the market of course circulated once again, but looking through the statistics it looks like the fastest going models in sales volumes are from Chinese companies.

Now, the massive increase in sales could be attributed to price cuts, improved marketing or a new model, but 7 out of the 10 shown here are Chinese models. Five of them are recently revised models that have just been relaunched (Note the MG3 is the change over from the MG3 SW from Nanjing-MG era to the new MG3 from SAIC).

Now let’s look at the manufacturers that saw the worst sales drop in October:

Here we can see that 5 of the 10 listed are foreign companies, their massive sales drop can be attributed to the launch of a new model (see Mazda3, and Lova), a lack of marketing (Galant) or just a plain old dislike for the car (see Honda Crosstour).

Are Chinese manufacturers cutting their prices to attract consumers away from foreign manufacturers? It doesn’t seem to be that issue, sure price cuts are happning but that is happening across the market, if anything Chinese manufacturers are streamlining their products in the second half of the year by introducing facelifts or new technology. BYD has been busy recently with the introduction of the 1.5T BYD G6 sedan which is likely to be a popular model in the next few months.

The Chinese market is no longer as clear cut as it once was, previously it was Chinese at the bottom making economy cars, and joint venture manufacturers in the middle and the top. The lines have become blurred. Chinese manufacturers are making better, more expensive cars, joint venture companies are making better lower cost cars and also introducing sub brands with their partners to compete with home grown brands such as Chery, and Geely. Comeptition in the market is going to get hotter in the next few months as more brands compete for an ever shrinking piece of pie. One pit that Chinese manufacturers should be eager to avoid is lowering their prices, by lowering prices you lower your profit, by lowering profit you shrink your future R&D budget, which will slowly take a manufacturer out of the race over time.

Elsewhere on China Car Times, we have a great preliminary book report from Dr. Garnet Kasperk and Ralf Drauz from the RWTH Aachen University in Germany. Their report into Chinese automotive manufactures as they grow their export bases is well worth the read, the full book can be bought from Lulu.com

Do you have questions, comments, suggestions, criticism or marriage proposals for the China Car Times website or newsletter? We’d love to hear from you – editor@chinacartimes.com

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