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Why independent car sales beyond expectations?
Last Updated: 2017-01-17 10:34 | CE.cn
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By Yang Zhongyang

The reason that independent brand car has been able to perform far beyond the expectations in 2016 lies in the continuous optimization of product structure, the steady improvement of product quality and the increasing enhancement of technological innovation capacity. At the same time of affirming the progress, it must be seen that there exists the weakness of current independent brand cars. Chinese car enterprises can only promote their brands up and up if they produce each of their product down-to-earth and around its own brand positioning for a long time.

The independent brand cars who were not recognized have achieved a "counter attack". Data released by China Association of Automobile Manufacturers days before show that in November 2016, the sales volume of independent brand passenger cars was 9.251 million sets, an increase of 20.2 percent year-on-year that exceeding the overall market and foreign brands. More importantly, in addition to the growth of sales volume and market share, the factors that support the rise of independent brand cars are the increases of profits and contribution to the groups as well. In the sales volume of 3 million cars of Changan Group, the share of independent brands has surpassed that of joint venture brands, accounted for nearly 60 percent; and the profit contribution of GAC Trumpchi to the Group has exceeded that of most joint ventures in the Group.

There are three main reasons that caused the independent brand cars performing far beyond the expectations in 2016.

Firstly, the product structure has optimized continuously. In recent years, the independent brand car enterprises have adjusted the product structure from the supply side and seized the two major market segments of SUV and MPV. It is not difficult to find through analyzing the sales data that in the top 10 list of SUV models, the independent brands have occupied 6 seats, while in the top 10 list of MPV models, the independent brands have occupied 9 seats. At the same time, a series of "star models" mainly based on SUVs such as Harvard H6, Trumpchi GS4, Baojun 560 and Changan CS75 have become the mainstays in the contribution of enterprises' sales volume. Among them, the Harvard H6 has created an excellent result of sales over 70,000 units in a single month of November and Trumpchi GS4 has surpassed 30,000 units as well. In contrast, due to the slow market response and long decision making time, as well as the inevitable process of introducing a model, the ability of the joint ventures to quickly launch products is far below that of the independent brands.

Secondly, the product quality has promoted steadily. For a long time, people think the independent brands as low in quality and price, copycat and plagiarism thus they can only enter into the low-end market. But after years of accumulation and development, many of the new models of independent brands are not next to the joint venture brands, whether in appearance or inherent quality. An Initial Quality Study 2016 (IQS) report on Chinese cars released by an international authoritative survey agency shows that among 21 mainstream car brands standing above the average quality line, there are 6 Chinese independent brands, accounted for 30 percent. Furthermore, the study of 2015 showed that every 100 cars of Chinese independent brands have 22 problems more than international brands, but this gap has narrowed to 14 in 2016. At this rate, by 2018, Chinese independent brands are expected to be racing together bridle to bridle with international brands in the new car quality.

Thirdly, the technological innovation capability has improved. Without technological innovation, it is difficult to have breakthroughs on the product. At present, car companies like Changan, GAG, and Geely have established a complete R&D capability and made breakthroughs in a number of core technologies. Take Changan as an example, the company has established not only a global R&D system in countries including China, United States, Britain, Italy and Japan to achieve 24 hours of uninterrupted collaborative R&D, but also a system of Changan automobile R&D process (CA-PDS) and a system of product test and verify (CA-TVS). Its BlueCore 2.0TGDI engine, after 6 years of independent R&D, has passed the national acceptance of 863 project experts, breaking the monopoly of foreign engines in advanced gasoline engine products of 2.0L and above.

However, at the same time of affirming the progress, it is noteworthy that the independent brand cars are facing many weaknesses currently. As the independent brands cut into the market mostly from low-end originally, they were low in quality and price in the minds of consumers, thus there were no brand premium ability, and the prices of independent brand products with even the same configuration of the joint venture brands were often much lower than those of joint venture brands. This also made it difficult for the independent brands to go to the high-end. To change this passive situation and enhance the brand gold content of the independent brands, it is necessary for the independent brand car enterprises to not only strengthen the brand confidence, but also have the patient of "adhering to go forward". Because the formation of any famous brand is the result of long-term accumulation of a large number of details, just like the one hundred years of education, so it is unrealistic to become famous overnight. In fact, Benz has experienced 130 years of precipitation and temper before it became a respected luxury car brand today. Therefore, Chinese car enterprises can only promote their brands up and up and really go beyond foreign brands if they produce each of their product down-to-earth and around its own brand positioning for a long time.

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