Business / Auto China

Great Wall in SUV bid to climb upmarket

By Xu Xiao (China Daily) Updated: 2013-02-18 08:04

Independent Haval badge for higher market segment

Over a decade after it first hit the market, the Haval SUV sub-brand from Great Wall Motors will become an independent badge with its own marketing and sales network in the first half of this year, said company president Wang Fengying.

"We have been preparing an independent network for the Haval. The final plan will be released during the Shanghai Auto Show in April," said Wang, noting the brand will be positioned to a higher end of the auto segment.

Its latest model, the H8, made its world premiere at the Guangzhou Auto Show in November.

Likely priced between 180,000 yuan (about $28,708) and 200,000 yuan, it is expected to go on sale by the end of the year, said the company.

Another new SUV model called the H2 will also be added to the Haval portfolio.

All its models will be made at Great Wall's Tianjin plant, said the company.

According to Shang Yugui, deputy sales manager at Great Wall, the rise to a higher consumer segment is a natural fit for the Haval brand.

Despite slowing growth in China's auto market last year - especially for domestic brands - sales by Great Wall increased 28 percent to 620,000 vehicles.

Best seller

The Haval SUV family sold 280,000 units last year, a 71 percent increase over 2011. Its H6 was the best selling SUV model in China in each of the final four months of 2012.

The company's recently released annual report showed that the automaker based in Baoding, Hebei province - which started operations making pickup trucks - had a net revenue of more than 5.7 billion yuan in 2012, an increase 62.6 percent from a year ago.

By the end of the year, the carmaker's assets reached 42.58 billion yuan up 28.5 percent from 2011.

Traditionally, domestic automakers have carried the image of cheap prices and low quality, making cars that sell for less than 100,000 yuan.

Many homegrown brands have tried to make the leap to a higher end of the market, but none have made significant inroads.

In 2009, Chery launched its first higher-priced car, the mid-sized Riich G5, with a sticker price of about 150,000 yuan.

But it sold just a small fraction of the company's small, popular QQ model priced at around 30,000 yuan.

In 2010, the Riich brand unveiled another mid-sized model, the G6, priced at about 200,000 yuan, but it also failed to gain much traction.

Shenzhen-headquartered BYD, known for its small and battery powered cars, offered an MPV priced between 139,800 yuan and 239,000 yuan, but sales of the M6 model remained in the doldrums since its introduction.

No instant success

Auto analyst Jia Xinguang noted domestic brands should not expect rapid success in their efforts to move up market.

"Currently, to fight pressure from foreign brands, most self-developed brands have a clear goal of high-end models," he said."But they don't stick to a consistent, long-term branding strategy, especially when facing difficulties in sales. This is not wise."

For a long-term strategy, domestic automakers should place more importance on improving product quality rather than just emphasizing sales, Jia said.

He also suggested they continuously improve dealer networks and management to build their brands.

Internet portal Tencent and the State Information Center organized an online survey of consumer attitudes about domestic brands last April, which showed respondents thought that quality is the symbol of being "high-end".

The survey found that customers were most concerned with the "quality gap" between self-developed models and those made by foreign automakers.

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