A Haval H6 model displayed at the Shanghai Auto Show in April. Photo: CFP

 
Domestic automaker Great Wall has once again amazed the industry with much stronger-than-average growth, with sales of certain models even now proving to be real competitors for products made by joint ventures with foreign auto brands.

In the first half of this year, Great Wall saw its sales reach 367,900 units, up 32 percent year-on-year, while data from the China Association of Automobile Manufacturers shows that the industry average growth rate was 10 percent during the same period.

Great Wall's Haval sub-brand, an SUV label which has been its star product over the past few years, reported a strong growth of 70.7 percent in the first half of the year, with a total of 186,600 units sold during the period.

A total of 88,824 units of the Haval H6 model were sold from January to June, ranking it third among the SUV models sold in China. The Tiguan SUV model produced by Shanghai Volkswagen ranked first with 100,362 units while the CR-V SUV model from Dongfeng Honda ranked second with 94,994 units.

The strong sales numbers in the first half of the year pushed Great Wall to the top of the list for domestic automakers and eighth among all carmakers, even including joint ventures with foreign auto brands.

Strong sense of focus

The firm that started off as a car-modification business in 1984 saw chairman Wei Jianjun take the helm in 1991. Inspired by the popularity of pickup trucks in foreign markets, Wei had Great Wall work on its first pickup truck, which was rolled out in 1996.

By zeroing in on the niche market, Great Wall became a leading pickup truck producer in China. And by 2002, the company began producing affordable SUV models, which has proven a success in a country where many consumers prefer sizeable cars like SUVs.

"A strong sense of focus has been the major reason behind Great Wall's growth," said Jia Xinguang, standing director of the China Automobile Dealers Association.

SUV models and pickup trucks account for around 60 percent of the company's business at present. Though the two segments report lower growth than the sedan market, the company's top executives have made clear on many occasions that Great Wall will continue its focus on the SUV market.

In March, Great Wall said that it was spinning off its Haval brand as a stand-alone brand, which now serves as the world's third SUV-dedicated brand after Chrysler's Jeep and Land Rover. 

Jia told the Global Times that competitive prices have been another reason behind the strong growth of Great Wall's SUVs. The Haval H6 model is priced at around 100,000 yuan ($16,000), about half the cost of the some 200,000 yuan-Tiguan model from Shanghai Volkswagen.

Zhang Yu, managing director at Automotive Foresight (Shanghai) Co, noted that the Haval H6 model is now considered a rival of some lower-end Hyundai Tuscon SUV models.

In 2003, Great Wall landed on the Hong Kong stock market, and in 2011, the company was listed on the Shanghai bourse, with chairman Wei becoming Asia's wealthiest car executive, holding a fortune of $6.5 billion as Great Wall continues on the path to become China's first global automotive brand.

Great Wall could become the next South Korean automaker Hyundai Motor Co, Bloomberg reported earlier this month, citing Bill Russo, president of automotive consultant Synergistics Ltd in Beijing.

Indeed, the company represents a rare breed of Chinese automakers independent of foreign partners and government, sparing it from having to split profits. Great Wall is likely to top the industry this year with a 16.4-percent profit margin, even higher than some luxury brands, according to Max Warburton, an analyst at consultancy Sanford C Bernstein.

Still vulnerable 

Yet despite Great Wall's strong growth, the company has little wiggle room for errors, said Automotive Foresight's Zhang.

"If executives get 'hot-headed' under praise from the media and make mistakes in development strategy, it could put the business at serious risk," he said.

Even though Great Wall sold 625,000 units of cars in China in 2012, the figure was still far less than the 4.4 million global sales of Hyundai. Therefore, the company cannot afford to suffer from any setbacks, be it a product design or quality flaw, said Zhang.

Great Wall's domestic rival Chery has set an example in this regard. The company that once reported the highest domestic sales number among homegrown brands for the first 10 years of this millennium has been slipping in recent years after launching an inadequate multi-brand strategy.

To avoid be pulled down by a strategic failure like Chery, some industry watchers insist that Great Wall not lay too many eggs in its product portfolio.

However, Wu Shuocheng, editor-in-chief of industry information portal gasgoo.com, holds that consumers may shift to smaller cars in the future as they move toward environmental protection, suggesting that Great Wall think about diversifying its product portfolio a bit to guarantee sustainable growth in the future.

At least somewhat aware of the potential shift, Great Wall has been trying to move into the sedan market. The company's C30 model is steadily gaining market share, with 71,358 units sold in the first half of the year, leading the segment of sedans priced between 50,000 yuan and 80,000 yuan.

Management matters

Known to lead in a traditional Chinese manner that features strong discipline and frugality, chairman Wei's military-like management style and tendency to be too involved in employees' personal lives is criticized by some.

"As the company further grows in size, the company needs strong and healthy management," said Automotive Foresight's Zhang, while also noting that the very kind of rigid management that Wei has been knocked for has worked to build the company a clean image among suppliers.

Wu from gasgoo.com said that if the company is serious about reaching new heights, it must bring in more talent to widen the scope of its management, which mostly comprises local executives from Baoding, in North China's Hebei Province, where the company is located.

Targeting annual sales of 1.3 million units by 2015, the company has ambitious plans to more than double the amount it currently sells, a goal that also includes nearly tripling its exports to some 300,000 units.

The company is also aggressively building manufacturing facilities throughout the world - including in Thailand, Russia and Bulgaria - but experts agree that Great Wall is still far from becoming a truly competitive player in the global market.

However, that doesn't mean that there isn't still very real potential for the company to compete head-on with established Korean automakers in the market in as few as five to 10 years, said Zhang.