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Chinese auto market competition fierce
(www.detnews.com)
Updated: 2007-04-20 21:05 Geely and FAW-Xiali have seen growth slow to single digits in 2007, while the market has continued to expand at clip of 30 percent. Causing the less than hoped for growth appears to be rising competition from new car industry entrants, including HaFei, BYD, and ChangAn. When we step down into the third-tier of Chinese car makers, the picture gets more complicated. At this level, there are 15 companies battling for 12 points of market share. The majority of companies in this bracket produce fewer than 50,000 units a year. Without higher volume production, it will be difficult to drive down costs. The smaller players are vulnerable and they know it. As a solution, several are turning to exports. The ones with the most ambitious export plans are Brilliance, Great Wall and Zhongxing Auto. Brilliance will begin exports of a $26,000 sedan, called the BS6, to Germany and the Netherlands in May. Brilliance performed better than most other Chinese brands in J.D. Power's 2006 study of initial quality. Zhongxing Auto and its U.S. partner, Chamco, have designs to launch SUVs in the North American market as early as in 2008. This will be a considerable feat since sales in China are on track to reach only 25,000 units this year. Great Wall already exports to Russia and has set sights on additional countries in Eastern Europe. China's leading SUV maker enjoys brisk growth at home and feels confident about its chances overseas, especially in other developing markets. Look for Great Wall to approach sophisticated markets like the U.S. and Japan somewhat later. Before counting the others out, keep in mind that Chery in 2000 was considered nothing more than a passing fancy. From the Chinese view, competition in the industry has only just begun. "We'll be number one in China in 2015," says Wang Chuanfu the Chairman of BYD, whose company started production in 2003. (For more biz stories, please visit Industries)
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