Local brands lag as tech-heavy foreign cars zoom ahead in China
The grille is from a Chevrolet, the headlamps from Jaguar, the interiors of a Hyundai, the suspension borrowed from Mercedes and the engine copied from Ford and you have a Chinese car at half the price of all these cars.autos Updated: May 07, 2012 21:26 IST
The grille is from a Chevrolet, the headlamps from Jaguar, the interiors of a Hyundai, the suspension borrowed from Mercedes and the engine copied from Ford and you have a Chinese car at half the price of all these cars.
This lack of ingenuity has started to hurt local brands such as Chery, Geely and BYD in China, with their share in the domestic market slipping to below 30% this year. At the same time the prospects of them going big in overseas markets remain as bleak as ever.
"I do not believe the local cars are world class yet but they are learning and improving," said John Edwards, global brand director, Land Rover. "In times to come some of them would be able to export to developed markets and make a name for themselves. Maybe in a decade or so."
While China remains firmly in the driver's seat as far as its market size is concerned, the heat is on its local brands to catch up with foreign carmakers. Traditionally, global heavyweights like VW, GM, Ford, Toyota, Nissan, Hyundai and Honda have concentrated on the big spender's fetish for sedans and SUVs leaving the budget category of small cars for the local brands. But now, even they are bringing in low-cost compact cars threatening the future of local companies.
"It is our top prority to make sure we don't fail under pressure," said Li Shufu,co-chairman, Zhejiang Geely Holding Group in an interview last month.
What works against these firms is that unlike Japan and Korea, China's car buyers are not as nationalistic and do not mind buying a Chevrolet Sail over a Geely or Chery.
To answer the call for technology some of them may get active in the M&A space. Geely, for example, bought Volvo in 2010, and may use some of its technologies. Others may look to do the same. All are investing in technology but have not been able to match their global counterparts.