As I sit here, clothed head to toe in products made in China, I wonder why there isn’t a profusion of Chinese produced cars in the world.
Given the growing entrepreneurial base in the country and given that countries like South Korea have managed to saturate their domestic market and enter the export market successfully, I would have thought it likely that there would be some large Chinese manufacturers now.
Is their domestic market full of domestically-produced vehicles already? If so, are the companies that produce these also Chinese? Or is it a case of say, Toyota having some massive manufacturing operation there?
Given the talk of massive manufacturing capability and cheap, plentiful labour, I would have thought that Car companies domestically and internationally would have jumped into China in the same way that a host of other manufacturing industries have.
It’s only recently many people in China drove cars. Before the recent economic reforms it was pretty much only Party officials, everyone else used bicycles.
So, small domestic car market, small car industry, nothing to export.
I don’t know if there are any Chinese car companies, but I do know that there are Japanese companies with plants in China that produce for the domestic market. According to the Mitsubishi 2002 annual report I’ve got in front of me, they sell about 2 million cars in China, most of which are imports from plants in Japan, but about 10% of which are produced domestically at Fujian and Yong Zhou.
It isn’t just private ownership that drives the motor vehicle market. I went to China in 1985 and the number of vehicles then was already maniacal, especially with the Chinese propensity to beep their horns at absolutely everything.
I have no cite but I was told that there are now over 2 million motor vehicles in Beijing alone. That’s just one city and not even China’s most populous.
IIRC 2002 production was around 1,000,000 passenger cars (depending on how you define this), with various VW entities producing approximately half the the amount. Production in 2002 showed the most stellar growth of anywhere in the world with by far the highest profit margins. Expectations are around 1.5 million units in 2003
All of the auto makers are actually in joint ventures, holding 50% or less of the JV. Although they may retain management control.
Factories at GM and VW are running 24/7 with a forecast that such over demand will continue for 6-24 months depending on who you ask.
Ford, GM, VW, DaimlerChrysler, Nissan, Toyota and Honda (not in that order) joint ventures are the main players. VW, Nissan, Toyota and others are investing billions more on top of the billions already invested.
Regarding the export market, this is under consideration. There are three main issues:
production volumes need to increase for additional efficiency
local content is still too low, thus the price to build a car in China right now is higher than many other production centers.
Demand still far outstrips supply with big fat juicy profit margins in the domestic market, so that’s where the makers focus their energy.
Consumers are the biggest buyers these days. Government is pretty small actually. The other major buyers are the taxi fleets.
For the future, auto financing is still in the infancy stage. Get ready for a lot of new cars.
Sublight, your mitsubishi numbers are waaaaaay off.
Actually a few manufacturers such as “Chang Cheng” and China Brilliance have begun exporting to developing markets in Africa and S. America.
Any potential Western consumers would be disinterested in existing models due to severe deficiencies in quality, emission, and safety standards. I have been approached about the prospect of exporting the above “Zhong Hua” model to the States but was put off by the decade-old styling and drive train, as well as a lack of any semblance of mechanical support. In short China’s independent manufacturers are cutting their teeth, and as commented upon earlier, concentrating on domestic demand.
I am seriously curious about what an expansion of the automobile market in China will do to the world’s oil markets. In the early '90s, IIRC, U.S. consumption was about 20 BO per capita while theirs was about 0.5 BO per capita.
I think Chinese manufacturers will also ahve to work with Western marketing professionals, if they think cars with those names will sell well in the states. Even with Japanese quality and Yugoslavian pricing, I don’t think too many Americans would be interested in driving around in a “Lucky Dragon,” “Happy Panda,” “Sea of Red Flags” or “Jade Dawn.”
Didn’t Japanese cars have names that were strange to American ears when they were first introduced to the US? You know, names like Toyota Sissy Boy, Subaru Delicate or Datsun Ladyfinger?
There is another Chinese manufacturer sneaking into the overseas market and the company is called Geely Automobiles (link to their product page). According to this site, Geely is targeting Vietnam, India, Pakistan and Ethiopia and none of their cars cost more than USD 10,000.
But elmwood brings up a fair point. How far would Geely get in the US or European markets with car names like “Merrie,” “Uliou” and “Haoqing?”
And please tell me that the Datsun Ladyfinger isn’t real?
Look how long it has taken for Korean cars to gain a foothold in the US market. Malaysia and Indoneisia have fairly large automotive manufacturing infrastructures but haven’t been able to make many gains in the US. There are pretty big hurdles to breaking into the US market: impression, name recognision, styling, marketing, not to mention quality, features, and safety.
Korean cars are getting over the extremely bad impression that the first Elantras left, low cost but extremely low quality. Any Chinese cars will have to overcome the same hurdle.
