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Despite concerns about environmental pollution, oil consumption, and economic overheating, the booming Chinese auto industry hasn’t slowed down. International auto giants and Chinese auto makers are racing to seize the site in this market. According to industry insiders, China will become the world’s second largest auto market this year and will top it in the next 15 years.
For the incumbent automakers in the United States, Japan and Western Europe, the explosive growth of the Chinese auto industry and the growth potential of the Indian market are driving companies to make significant and profound changes in their investment strategies, employment and strategic priorities. Companies such as General Motors Corp., Ford MotorCo., Daimler Chrysler AG, and Volkswagen AG, regardless of how they lay off their employees in their respective domestic markets, shut down factories and reduce The number of models, they will continue to recruit in China and increase the listing of new models.
In the past 10 years, Western auto makers have become increasingly interested in the Chinese market. After experiencing a period of slower growth in 2004, the Chinese auto market has been advancing rapidly, which has given auto makers a sense of urgency to grab a favorable position. At the same time, Chinese consumers’ brand loyalty and purchasing patterns still remain. In the process of gradual formation.
The Beijing International Auto Show kicked off last Saturday, with the vast majority of international auto makers and dozens of Chinese domestic manufacturers exhibiting. DaimlerChrysler executives used this event to publicize their plans to expand sales in the Chinese market, including launching models designed for the US Dodge, Jeep and Chrysler brands in the Chinese market. Chrysler is also considering increasing the number of parts purchased from China for its factories around the world. At the same time, DaimlerChrysler’s management is also developing an extensive restructuring plan for its loss-making Chrysler business, including layoffs and closing factories.
Tom La Sorda, chief executive of the Chrysler Group, told a press conference at the Beijing auto show that 92% of the company’s revenue comes from the Nafta market, the North American Free Trade Agreement (North American Free Trade Agreement). Agreement, Nafta) covers the United States, Mexico, and Canada. “We know that companies must turn to other markets in the world.†Lesotho held talks with Yin Tongyao, chairman of China's Chery Automobile Co., on Saturday. The two companies are discussing the cooperation in the production of small Chrysler vehicles. However, both parties did not announce any agreement over the weekend.
Yin Tongyao told Dow Jones Newswires after the talks with Lesotho that Chery will bring a cost advantage to the joint venture with Chrysler. "We eat rice and they eat bread," he said. "Our costs are cheaper."
In addition, Toyota Motor Corp., which ranks second among Japan’s auto giants and global auto sales, also selected Beijing Auto Show to hold its global launch ceremony for the new Corolla, which will begin to include the US market from next year. Global market sales. In the past, such new car releases were often chosen in Tokyo or Los Angeles. By cooperating with two Chinese auto companies in production and sales, Toyota Motor aims to increase the sales volume of cars in the Chinese market by more than 30% to 400,000 next year. Currently in the Chinese market, Toyota Motor is lagging far behind General Motors, Volkswagen and its joint ventures in China. The company expects to sell about 300,000 vehicles in China this year, and it is expected to reach 1 million by 2010, which is equivalent to 10% of the expected size of the Chinese auto market at that time.
Yoshi Inaba, chairman of Toyota Motor China and executive vice president of the company, said that we believe the Chinese market is becoming as important as the US market. By 2020, the annual demand for automobiles in the Chinese market is likely to reach 25 million vehicles.
Industry insiders also admitted that the rapid increase in car ownership will put pressure on China's road infrastructure and will also increase the burden on the environment. However, such concerns do not seem to have affected the expansion plan of the auto industry and have not extinguished the enthusiasm of the Chinese people for buying cars.
With the support of advanced technology and strong financial strength, giants such as General Motors, Volkswagen and Toyota Motor have been leading the way in the Chinese market. However, as the Chinese market continues to expand, Chinese domestic rivals are also fighting for market share, which makes the auto giants face a competitive pressure.
Shanghai Automotive Industry Co. has achieved good development through cooperation with GM and Volkswagen. Today, the company uses funds earned from these joint ventures and more than 70 operating departments for the development of autonomy. The brand Roewe and South Korean brand Ssangyong car. Philip Murtaugh, executive vice president of SAIC Motor and former senior executive of General Motors, said that the company’s target core is the Chinese domestic market. Murphy claims that SAIC must develop its own car craftsmanship and technology compared to those of international auto giants. However, SAIC also has its own advantages, one of which is to understand the Chinese market.
Chery is one of the few smaller automakers in China who dares to announce plans for attacking overseas markets, either in isolation or in cooperation with established foreign companies. For the question of when to export cars to developed markets, managers of Chinese auto makers are generally very cautious. Their focus is mostly on those less mature markets such as Africa, Latin America, and Eastern Europe.
For all participants in the Chinese automobile market, the more pressing issue at the moment is the disorder of competition, especially in the fast-growing low-end market, where there are more than 100 automakers.
Zhou Wenjie, deputy general manager of Dongfeng Motor Corp., complained that due to the proliferation of similar models, by 2010, on average, each model in the Chinese market will only sell about 12,000 vehicles, which is much lower than the 19 in 2002. 700 vehicles. In contrast, a successful vehicle in the US market can sell 100,000 to 200,000 vehicles or even more per year. Zhou Wenjie said at the Beijing auto show on Friday that for those models without any cost, they should reduce or withdraw their investment.
The fierce market competition is driving down prices and has already hurt the profits of some auto makers. Many in the industry believe that industry consolidation is imperative.
However, SAIC's Murphy said that the market's growth will support the automotive manufacturers' business. The central government may not introduce measures to promote the automotive industry's major changes. Murphy said that before the overall economy begins to decline, there will still be a large number of automakers in the Chinese market.
For the Detroit auto giants, General Motors and Ford Motor Co., the rapid rise of the Chinese market is at a time when their business is facing difficulties. Due to rising costs and sluggish sales in the domestic market, these two automakers once dominated the world are falling into a quagmire of losses. GM's and Ford's bond ratings are set at trash levels, so they have to use assets as collateral to borrow to make up for losses in the US market while maintaining investment in emerging markets.
Nick Reilly, the group's vice president for GM’s Asia-Pacific operations, said that under normal circumstances the investment in the mature market should be used to fund investment in emerging markets. Although Raleigh is full of confidence that GM’s North American operations will soon turn profitably into losses, he also stated that, for the time being, GM’s Asia Pacific operations are self-financing, and they need to continue to do so in the future.