Interesting commentary in Automotive News
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Some Chinese brands compete nicely with the big players on giant stage
Yang Jian / Automotive News / 2011-7-29
SHANGHAI -- At a time when General Motors, Volkswagen and other global automakers are making big investments in China, it's easy to be pessimistic about the prospects of China's domestic companies.
For example, Chery and BYD, China's top-selling domestic brands, are both struggling to stabilize sales and market share.
Chinese consumers have noticed the trend, according to a report this month from the market research firm Gasgoo. More than 70 percent of Gasgoo's respondents said independent Chinese brands face the risk of being wiped out.
China's domestic automakers have lost market share due to poor brand images and weak technology. But their hardships should not blind us to the fact that some Chinese brands are holding up remarkably well.
One such company is Great Wall Motor Co., which has relentlessly pursued better quality. It is the first Chinese company to certify its products for sale in the European Union.
In 2009, Great Wall won approval to sell an SUV, pickup and two sedans in the EU. Last year, a Great Wall executive told me the company knew that EU certification would force it to improve quality.
Meanwhile, Great Wall has kept its product development focused tightly on a few profitable niches: SUVs and pickups. And while competitors like Chery launched a confusing welter of new brands, Great Wall eliminated nameplates and consolidated all of its car models under the Voleex brand.
These efforts have brought ample rewards. In the first six months of 2011, Great Wall sold more than 178,000 vehicles, up 47 percent year-on-year. The company's net profit for the period jumped approximately 80 percent.
Another canny operator is Zhejiang Geely Holding Group Co., the independent automaker that purchased Volvo Car Corp. last year.
The company is phasing out inexpensive models under the Geely brand while it introduces better products under new brands.
The plan appears to be working. While overall sales in the first six months fell 13 percent, sales of the Emgrand EC7 sedan have averaged a healthy 8,000 units per month.
The EC7 carries a starting price of 75,800 yuan ($11,800), which allows Geely a decent profit margin.
To be sure, Great Wall and Geely still lag far behind their global rivals on quality and technology. But if they maintain their momentum, they will continue to gain strength and go upscale.