World’s carmakers face growing competition from China

2011-11-24 13:17

Guangzhou, China – The first Chinese cars built in Europe started rolling off the conveyor belt this year when Great Wall Motor Co built a plant in Bulgaria together with Litex Motors.

The Voleex C10 was the first vehicle off the assembly line of the plant near the town of Lovech last week with tests of the production facilities and installations set to continue for the rest of the year before the first sales are launched at the beginning of next year.

The Hover H5 sports utility vehicle and Steed pickup would also be built at Lovech.

All were expected to receive a “Made in the EU” label and would be available for export to each of the other 26 EU countries at a competitive price without the imposition of tariffs or duties.

Ambitious Chinese automakers are exhibiting this week at the Guangzhou Auto Show in their home market and are already displaying plenty of confidence that they would be able to compete against their larger international competitors.

So far, most Chinese car exports involve cheap cars destined for Russia, Eastern Europe, the Middle East or Africa.

However, the companies also have the US and Western European markets firmly in view.

The new Great Wall factory has a production capacity of 50 000 cars per year, which are destined for the whole of Europe.

The disastrous fate of Chinese carmaker Brilliance China Automotive Holdings Ltd, which entered a partnership with BMW AG was not expected to be repeated.

The Brilliance Galena failed the EuroNCAP crash test in 2007 while the smaller Splendor model subsequently received zero out of a possible five points in the highly respected German ADAC crash test.

Car expert Ferdinand Dudenhoeffer said he believes Chinese carmakers are “still weak today” but warns against European companies underestimating their ability to make progress.

“Great Wall, Chery, Geely, Foton and the others will learn to walk very quickly,” he said.

Chinese companies such as the Lifan Group and Chery Automobile Co Ltd have enjoyed growth rates of 150 per cent in Russia, the director of the Centre for Automotive Research said.

According to Dudenhoeffer, the strategy is to build up market share in emerging markets before tackling the more difficult industrialised countries, such as the United States and Germany.

The takeover of Swedish carmaker AB Volvo by Geely Automobile Holdings Ltd has revealed that company as one of the more aggressive players, Dudenhoeffer said.

Chinese companies can also obtain valuable technological expertise by buying struggling European carmakers.

There has been some resistance to the Chinese advance with US firm General Motors Co, for instance, blocking the sale of Swedish carmaker Saab AB to a Chinese company.

Indeed, General Motors intends not to renew its licences for Saab spare parts to prevent any of its technology falling into Chinese hands.

No one wants to speculate when they believe a truly competitive export battle from China would begin.

The Chinese automobile market is still the largest in the world despite slower economic growth, meaning Chinese companies currently enjoy greater opportunities at home than in the more stagnant markets abroad.

“I think they will turn their attentions elsewhere one day but not so soon,” said Volkswagen AG’s boss in China, Karl-Thomas Neumann.

“I would estimate between five and 10 years. They still need more time.”

Dudenhoeffer, meanwhile, said he was convinced it would be impossible to stop the Chinese.
“It will happen step by step,” he said.

Exports and the presence of Chinese factories in Europe mean Chinese cars would be clearly visible on the streets of Eastern Europe by 2015.

“The position of the Koreans, namely Hyundai and Kia, is where Geely, Great Wall or Chery will be in 15 years at the latest,” Dudenhoeffer said.

“In other words, the Volkswagens of this world need to take the Chinese very, very seriously.”

Join the conversation!

24.com encourages commentary submitted via MyNews24. Contributions of 200 words or more will be considered for publication.

We reserve editorial discretion to decide what will be published.
Read our comments policy for guidelines on contributions.

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Comments have been closed for this article.

Inside News24

 
/News

Book flights

Compare, Book, Fly

Traffic Alerts
There are new stories on the homepage. Click here to see them.
 
English
Afrikaans
isiZulu

Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Settings

Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.




Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.