Chinese carmakers muscle competitors

(Shenzhen Daily/Agencies)
Updated: 2006-11-20 13:49

With sales soaring for cars of every size and shape, China will pass Japan as the second-largest vehicle market this year, after the United States. But the Chinese market may still not be big enough to support all the homegrown manufacturers as well as the foreign automakers trying to do business here.

China has more car brands now than the United States, as companies like Fiat and PSA Peugeot Citroen compete with General Motors, Ford, DaimlerChrysler, Toyota and Nissan in joint ventures with Chinese companies.

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But while car sales in China have climbed this year, automakers have increased their output even faster, causing fierce competition and a slow erosion in prices ?a even for top-selling models like the Buick Excelle and Hyundai Elantra.

As executives of the world's multinational automakers gathered in Beijing for the international auto show which opened Saturday, they are particularly watching the growing competitiveness of Chinese manufacturers, who have been steadily gaining market share over the last several years and are expected to continue doing so.

Biggest winners

Some of the biggest winners in the Chinese market have been little-known domestic automakers that have grown up in even lesser-known cities, like Geely in Taizhou, Chery in Wuhu and Hafei in Harbin.

These low-cost producers do not yet have the marketing muscle, brand names and global distribution to compete on their own in the industrialized world, though they are starting to form international alliances to do so.

Geely, for example, has just set up a joint venture with a British company to make the famous London "black cabs" in Shanghai for markets around the world, while Chery is working out the details of a deal with DaimlerChrysler to make subcompacts in Wuhu for the American market.

Home brands play big

But in the home market, Chinese automakers are proving increasingly formidable competitors. After practically disappearing before an onslaught of foreign-dominated joint ventures in the 1990s, Chinese brands have recovered and now hold a quarter of the domestic market.

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