Top Biz News

China's automobiles struggling to enter EU market

By Qiang Xiaoji (
Updated: 2009-12-08 15:17

In the first three quarters of 2009, the total number of cars manufactured by China's five exporting manufacturers and exported to the European Union (EU) amounted to only 745 units, according to statistics released by European Automobile Manufacturers' Association (ACEA), China Business News (CBN) reported Monday.

The pioneers, Brilliance Auto and Landwind only exported eight and one cars respectively to the EU in the first nine months of this year.

Zhong Shi, an automobile expert, said that he knew China's car export to the EU was low but did not expect numbers to be that poor.

Chinese car makers decided to enter the EU market four years ago but until now, they were still stalling outside the European market, the report said.

Related readings:
China's automobiles struggling to enter EU market Nation's automakers are seeing 'green' 
China's automobiles struggling to enter EU market Auto sales exceed 8M units in first 8 months
China's automobiles struggling to enter EU market China leads the world in auto sales, production
China's automobiles struggling to enter EU market China's auto sales, output exceed 12m units in Jan-Nov

Failure in Europe

Currently there are five main Chinese companies, Brilliance Auto, Chana Auto Co Ltd, Great Wall Motors, Landwind and Lifan Group, exporting cars to the EU.

In the first three quarters, the biggest exporter, Great Wall Motors, sold 675 units out of 745 to the EU. Landwind, China's first car maker selling cars in the EU only sold one car in Europe in the first nine months of this year. Chana, a Chongqing-based company which claimed to have six overseas factories, only made a total sale of 34 units in the January-September period and Lifan, also based in Chongqing, sold only 24 units in the same period.

In comparison, the car markets in Russia and Eastern Europe are much easier to enter. But as the global car market shrank, Chinese car makers were met with bigger obstacles.

In the first ten months of this year, Chinese company Chery sold 3,860 cars in Russia, down 74 percent compared with the same period last year and a big decrease from its peak when its annual sales in Russia amounted to approximately 30,000 units.

Lifan, BYD and Great Wall Motor also witnessed a sharp decrease in their exports to Russia. Great Wall Motors and BYD's car export volume to Russia both decreased by over 70 percent.

It was not a good timing for exporters, Zhong said. China is now the most important market worldwide. It was better to emphasize the domestic market than to sell cars in Europe, he added.

Europe, as the most developed and mature auto market, had a much higher threshold than South America and Africa. As a result, Chinese auto companies were striking big deals in Africa and Middle East but finding it hard to break the ice in the EU.

The former chairman of The German Association of the Automotive Industry Bernd Gottschalk said although the financial crisis had triggered the demands for low-price cars, Europe would not become a center filled with cheaply-priced cars like India-made Tata.

The biggest challenge for those Chinese car makers who aimed to enter the European markets was security and emission rather than the control of cost, Gottschalk said. Strict safety technical indexes and supervision on carbon dioxide emissions were essential, he added.

Earlier, Brilliance and Landwind were both embarrassed in the impact tests held by Germany, which resulted in the Chinese cars being labeled "bad quality" by the local media, which had made it even harder for Chinese cars to be sold in Europe.

Chinese-made automobiles already had a comparatively strong competitive strength, Zhong said adding that the low sales in Europe were largely attributable to brand image.

Hope in Turkey

Like the founder of Honda Soichiro Honda's determination to enter the US market, Chinese car makers have never given up the ambition to enter the European market after repeated failures, and will keep adjusting their strategies.

After establishing a factory in Mexico, Chana was considering expanding in Turkey; Chery's negotiation to build a joint venture with Turkey has started; Geely and Great Wall Motor have also begun recruitment in Turkey.

Jin Gebo, assistant to the general manager of Chery told CBN earlier that the Turkish government was keen to invite them to build factories in their country. According to an unnamed source, Chery and a local dealer may co-fund the establishment of a new factory. The total investment would amount to $500 million and the estimated annual output would reach 100,000 units, the CBN reported.

Zhong said Turkey was an ideal choice for its geological location and cheap labor force. More and more Chinese car makers are moving into Turkey, making it a base for Chinese cars to enter the European market.

Chen Wenkai, CEO of said it was urgent for Chinese auto companies to change its attitude. They should be more than just traders and use overseas purchasing, research and development and manufacturing to build its core competitiveness, he added.

Now many Chinese automobile companies like Chana, Chery and Geely have established factories overseas, but these factories are just for assembly. The car parts are manufactured in China and then sent to the overseas factories to be assembled and sold.

An unnamed industry insider attributed the decrease in the sales of Chinese cars in Russia to the pressure from the Russia government. He said it was impossible for the local government to turn on green lights for foreign cars when their own brand Volga was about to close down. The only solution is to build real factories manufacturing cars there just as transnational corporations did in China, he added.