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Success and challenges of Chinese-brand vehicles

Success and challenges of Chinese-brand vehicles

BEIJING: China’s three automakers are in the fast lane with their own brand vehicles. Geely Auto, Chang’an Automobile, and Beijing Automotive Industry Group, or the BAIC Group for short, say their cumulative production in the past few years has reached a new level. How did they do this? And what are the challenges ahead. In the middle of August, BAIC announced a 5-year milestone: car number one million.

At almost the same time, rivals Chang’an and Geely also say they too hit the one-million mark. “This means that after years of hard work, our own brands and independent innovation have reached an outbreak period,” said Fu Yuwu, chairman of Society of Automotive Engineers of China. Most China’s car companies have turned to research and quality improvement to win the market.

From January to July this year, the total sales of Chinese-brand cars topped 4 million units, with a year-on-year increase of 21.4 percent. For Guangzhou Automobile Group alone, it was over 190 thousand units, with a year-on-year growth of 161 percent. As one of the rising stars, this company has its own strategy.

It’s reported the R&D division of Guangzhou Automobile receives six to seven percent of the company’s annual revenue. The level is almost the same as in companies like Mercedes-Benz and BMW. More and more Chinese automakers are moving away from imitation.

“In terms of researching a new product, we know how to “shoot the arrow at the target” now. But before, we just copied from abroad,” said Zhang Fan, head of design, Guangzhou Automobile Group.

1,200 engines roll off the line every day. And quantity does not come at the expense of quality. “We allow only one mistake per thousand cars,” said Guo Yunqiang, productin responsible person.

In 2014, the domestic brand share of the Chinese market was 33.8%.  In the first half of this year, the number soared to 41%.

And here’s one of the key factors for the jump: increasing investment in sport utility vehicles, or SUVS. Geely recently introduced another compact SUV, a sister to its Emgrand Boyue, but priced a bit lower.

“The parallel increase in price and market share — this is one sign of the improvement of our brand’s competitive power. And this power mainly relies on the production of SUVs,” said Xu Changming, state information center. But experts advise against betting everything on SUV production.

Joint venture brands still hold an absolute advantage in car sales and production. And many Chinese brands are still not turning a profit after years of investment.  They need to build competitive power and brand premium to go the distance.