Into the wild west

By Cong Mu Source:Global Times Published: 2012-9-14 22:15:03

Models pose at the Chengdu Motor Show, which ended September 9. Photo: CFP
Models pose at the Chengdu Motor Show, which ended September 9. Photo: CFP

As purchase curbs dampen car sales in first-tier Chinese cities and markets are saturated in East and Central China, automakers are looking to western areas as well as lower-tier cities for future growth.

Chinese and foreign car manufacturers released 48 new models, including six global debuts, during the 10-day Chengdu Motor Show, one of China's four major annual auto exhibitions, held between August 31 and September 9 in the capital city of Southwest China's Sichuan Province, Xinhua News Agency reported.

The event attracted a total of 550,000 visitors, and sold at least 1,1673 vehicles, including 873 luxury passenger cars, Tianfu Morning Post reported on Tuesday, citing official figures. Jaguar Land Rover alone sold nearly 400 units, the local newspaper reported.

The Indian-British luxury carmaker has localized its sales strategy for the Chinese market. It released its latest Jaguar XF and XJ all-wheel drive sedans in Chengdu, with upgraded entertainment systems, improved comfort and smaller turbocharged engines to court the Chinese nouveau riche and meet more stringent emissions requirements.

In China, the XJ is priced at 2.6 million yuan ($410,200) for a five-seat model and 3.1 million yuan for a four-seat model, Nanjing-based Modern Express reported on September 5.

Meanwhile, the company premiered its 2013 Range Rover Sport in this city in the Sichuan basin, which is surrounded by high mountains, in a bid to woo the luxury SUV market in China, car sales information website reported on Tuesday.

As a result, Jaguar Land Rover delivered over 47,000 cars in China in the first eight months of the year, growing by nearly 90 percent year-on-year, despite an overall lukewarm automobile market in the country, the website reported.

Difficult sales

In August, vehicle output and sales continued to climb in China, especially in the passenger vehicle sector, but the market share of domestic brands went on the decline, Chen Shihua, director of the information department of the China Association of Automobile Manufacturers (CAAM), said at a press conference in Beijing on Monday.

From January to August, China produced 10 million passenger vehicles and sold 9.95 million, up by 8.7 percent and 8 percent respectively, the CAAM said in a press release.

The SUV was the best performer, with annual sales and production growth rates both exceeding 30 percent, it said.

Meanwhile, domestic brands sold 4 million passenger cars in the same period, accounting for 40.3 percent of the overall market share, 2.4 percentage points lower than the same period last year, it said.

In years past, the combined market share of domestic carmakers, whose technologies and marketing skills are inferior, was usually higher in August than in July, the trade body's historical data showed.

But the trend reversed this year, signaling increasing competitive pressures on these companies during a time of slow growth, the association noted.

The Chinese vehicle market has entered a tepid growth period after a 10-year boom that saw growth rates climb above 20 percent, Zhu Fushou, general manager of Dongfeng Motor Corp, a major State-owned automaker, told a forum during the Chengdu car show, Automotive News China reported on Tuesday.

"We expect the average annual sales growth of the Chinese market in the next 10 years to be less than 10 percent," he was quoted as saying.

Zhu stated that there are three major reasons for this. First, China's growing vehicle fleet has significantly increased the nation's dependence on oil imports, while auto emissions have damaged the environment, both of which are unsustainable.

Second, passenger vehicles and commercial trucks are largely concentrated in a few heavily populated urban areas in Central and coastal China, leading to bad traffic jams and purchase curbs.

Third, China's highways were a little more than 4 million kilometers long at the end of 2011, not long enough to accommodate so many cars, and about 20 percent of highways are poorly maintained.

Zhu also mentioned that most of China is hilly, which may partially explain the robust sales of SUVs in areas like Chengdu.

Western speed

Besides releasing a record number of new models at the Chengdu auto show, automakers invited big-shot celebrities such as Karen Mok and Chen Kun to endorse their promotions during the event.

"The reason why the car enterprises put so much emphasis on the show is simple; it's because of the increasing purchasing power in Southwest China," Beijing Business Today reported on September 4, quoting independent auto analyst Jia Xingguang.

In the first half of 2012, passenger vehicle sales in Sichuan, Guizhou and Yunnan provinces, the Tibet Autonomous Region, and Chongqing municipality together reached 560,000 units, increasing by 8.6 percent from a year earlier, notably higher than the national average rate of 2.9 percent, the newspaper said, citing figures compiled by online giant Tencent.

Car consumption in Chengdu has grown steadily at a rate of around 20 percent, and in 2011 there were 1,000 new vehicles on the city's roads every day, the news report said.

Utilizing their superior technology and marketing prowess, foreign car companies showed their confidence recently in further exploiting the market in China's western regions.

Korea's Hyundai Motor Company and Sichuan South Chun Auto Group jointly kicked off the construction of a 20 billion yuan commercial vehicle manufacturing base in Ziyang, Sichuan Province, on August 28, according to an announcement on the provincial government's website.

Meanwhile, Ford Motor Company and its joint venture Changan Ford Mazda Automobile (CFMA) broke ground at a $600 million assembly plant in Chongqing on August 27, with the intention of expanding CFMA's research and engineering capacity there, Ford Motor Company said in a press release.

Luxury carmaker Mercedes-Benz recently opened a western regional head office in Chengdu, after its sales in China were beaten by its archrival, BMW, in August.

BMW China's sales rose nearly 38 percent year-on-year to 25,377 units in August, while Mercedes' sales went up slightly by 3 percent year-on-year to 14,205 units in August, Automotive News China reported on Tuesday.

Eager to please, Kia Motors dressed up its car model in a black fishnet shirt and jelly bra, and was subsequently banned from the Chengdu Motor Show.

"Now, how long until the Chinese finally match the famous TVR/London Show gambit from the mid-1970s, getting the booth babes to model totally nude?" a netizen whose handle is sykerocker commented on on Monday.

Not long, perhaps, with the western wind a-blowin'.

Posted in: Companies

blog comments powered by Disqus