By Liu Jin
According to statistics of the auto market in May published recently by China Association of Automobile Manufacturers, the market performance of home-grown brands was not ideal; in May, 550,800 passenger vehicles were sold, an increase of 6.8 percent year on year, far lower than the average performance of 11.9 percent of the industry; the market share of home brands again went down, to 39.4 percent, lower than the 39.6 percent in April and the 40.3 percent at the same period of last year, and almost 5 percentage points lower than the highest point of 44.3 percent.
"Annual production and sales of automobiles in China will exceed 20 million units, and total output value has exceeded RMB 5 trillion Yuan", said Dong Yang, standing vice chairperson and secretary general of China Association of Automobile Manufacturers, illustrating the importance of the auto industry with numbers.
Although the numbers are impressive, the performance of home-grown brand cars is disheartening. The current market share (39.4 percent) of Chinese brands in the Chinese market has been reduced significantly compared to the once 44.3 percent in 2009. Why is it that sales of domestic auto companies are slipping rapidly when China's overall auto market is growing?
On one hand, this has something to do with consumers' car-buying habit. Besides daily transport and travelling needs, one major factor many consumers consider when buying a car is face. Therefore, joint-ventured models and imported models perform outstandingly in the Chinese market. Not many consumers would consider Chinese brands when they are buying a semi-luxury or luxury car, unless a certain model happens to really fascinate them.
On the other hand, the main difficulty home-grown car companies encounter in their development is that they have yet to achieve significant breakthrough in key technology. Cliché as it may sound, technology remains a barrier in the path of the development of home-grown brands. Take engine and transmission as examples. Although domestic auto companies have developed turbo engine and CVT in the past two years and their technical indices have reached medium international level or above, they are mainly sported in the high-end models of these brands, and their mainstream market products are still equipped with conventional small-displacement engines that are not very much competitive. Join-ventured cars of similar price may not necessarily excel in such aspects, but their overall performance, particularly power train, is probably better.
Home-grown car companies have also been lurching in the progress of their products. In terms of product structure, home-grown models concentrate in the AO class and A class, homogeneity being a salient feature of these models. As for the thriving SUV market, although several domestic companies have introduced SUV products, they don't perform as well as expected due to lack of product appeal.
Now that home-grown auto companies have been neither able to hold their grounds nor to explore new territory, it is rather natural that their overall market share slips. With pressure from the market, home-grown auto companies are accelerating their adjustment pace. According to the change of sales statistics in the past two years, the development mindset of home-grown auto companies seems to be changing from "more products and more fights" to "optimized and better-quality products". The fall in overall sales can be viewed as a periodical market response during the transformation process.
According to information, SAIC, FAW, Chang'an, BAIC, Dongfeng and GAC Group have all established their medium- to long-term R&D investment plans. The total R&D investment of these 6 auto companies from 2011 to 2015 will exceed RMB 160 billion Yuan; among them, SAIC has the largest R&D investment of RMB 45 billion Yuan.
Besides enhancing technical support, home-grown brands are also vehemently preparing brand promotion campaigns. The large-scale touring exhibition of Chinese brand cars organized by China Association of Automobile Manufacturers will be launched in Beijing soon. The event will tour 10 cities across China in 3 months. Destinations of the event, being the first nationwide touring exhibition of Chinese brands, are all second-tier and third-tier cities that have vast development potentials and proper consumption capacity. These are cities that the organizing committee considers the most suitable for sales of Chinese brand vehicles. Rigid demand for car consumption in second-tier and third-tier cities remains robust, and this will be the next growth engine of China's auto industry.
