Global Automakers Unveil Affordable Local China Brands
Carmakers introduce nameplates with Chinese companies to tap growth from China’s expanding middle class
Some of the new Chinese cars unveiled at this week’s Shanghai Auto Show are affordable for millions of buyers — a happy development for Beijing that might prove costly for the global automakers producing them. General Motors unveiled the 630 sedan, the first model from its new Baojun badge developed with Chinese joint venture partners. The four-door is based on an older GM car and will have a sticker price of 70,000 to 100,000 yuan ($10,700 to $15,300).
Honda Motor displayed the plain, compact four-door S1 at the auto show, the first from its new Everus line which went on sale this week. Nissan Motor showed off an unnamed car it plans to sell under the Venucia brand next year. These so-called “indigenous” brands will only be sold in China and their prices are aimed at a segment of the market that is already crowded with cars from lesser known Chinese brands. They’ll also be in competition with the foreign automakers’ existing entry-level models. Car makers say they are introducing the nameplates with their Chinese joint venture partners so they can tap growth from China’s expanding middle class. But industry watchers say it’s a new tactic by China’s government, which is unhappy with the failure of state-owned automakers to gain significant market share for Chinese brands since partnering with foreigners.
When global automakers first entered China a quarter century ago, they were required to operate in joint ventures that were aimed at helping local partners learn and grow. Foreign automakers were allowed to keep hold of their technology and other intellectual property in those original agreements. Both parties were happy to split fat profits, but the results have disappointed China’s communist leaders because international brands such as Honda, Buick and Volkswagen now dominate with 70% of the market.
Manufacturing Chinese models is the “new cost of market access” for global automakers, said Mike Dunne, whose consultancy, Dunne, specialises in Asia’s auto markets.
“Beijing’s not happy,” so authorities drew up a new set of rules that would require car makers to share their technology if they want to expand in China, said Dunne, who is writing a book on the history of General Motors in China.
Car makers won’t admit it’s happening because it would be “politically incorrect,” he said.
Nissan has released few details about the car it plans to sell under the Venucia brand with partner Dongfeng Motor, including the price. The company plans to open 100 dealerships next year to sell the car. Kimiyasu Nakamura, president of the Japanese automaker’s Dongfeng joint venture, acknowledged the possibility that the new car would “cannibalise” sales of Nissan’s entry-level Sunny. GM denied it was strong-armed into launching Baojun, saying it decided to create the brand four years ago to sell cars in China’s interior cities, where it sees great potential for growth.
“The Baojun 630 will address the growing demand across the country for affordable transportation,” said GM China President Kevin Wale. GM will make the Baojun, which translates as Treasure Horse, with joint venture partners Shanghai Automotive Industry and Wuling Automobile Cars bearing the Baojun badge will be produced at its factory in Guangxi in China’s southwest. PSA Peugeot Citroen CEO Philippe Varin said developing a third brand was “part of the deal” for its new joint venture with Chang’an Automobile Group, according to a report in the Financial Times in March.
Customised show
• THESE SO-CALLED “INDIGENOUS” BRANDS will only be sold in China and their prices are aimed at a segment of the market that is already crowded with cars from lesser known Chinese brands
• GM WILL MAKE THE BAOJUN , which translates as Treasure Horse, with joint venture partners Shanghai Automotive Industry and Wuling Automobile Cars bearing the Baojun badge
Carmakers introduce nameplates with Chinese companies to tap growth from China’s expanding middle class
Some of the new Chinese cars unveiled at this week’s Shanghai Auto Show are affordable for millions of buyers — a happy development for Beijing that might prove costly for the global automakers producing them. General Motors unveiled the 630 sedan, the first model from its new Baojun badge developed with Chinese joint venture partners. The four-door is based on an older GM car and will have a sticker price of 70,000 to 100,000 yuan ($10,700 to $15,300).
Honda Motor displayed the plain, compact four-door S1 at the auto show, the first from its new Everus line which went on sale this week. Nissan Motor showed off an unnamed car it plans to sell under the Venucia brand next year. These so-called “indigenous” brands will only be sold in China and their prices are aimed at a segment of the market that is already crowded with cars from lesser known Chinese brands. They’ll also be in competition with the foreign automakers’ existing entry-level models. Car makers say they are introducing the nameplates with their Chinese joint venture partners so they can tap growth from China’s expanding middle class. But industry watchers say it’s a new tactic by China’s government, which is unhappy with the failure of state-owned automakers to gain significant market share for Chinese brands since partnering with foreigners.
When global automakers first entered China a quarter century ago, they were required to operate in joint ventures that were aimed at helping local partners learn and grow. Foreign automakers were allowed to keep hold of their technology and other intellectual property in those original agreements. Both parties were happy to split fat profits, but the results have disappointed China’s communist leaders because international brands such as Honda, Buick and Volkswagen now dominate with 70% of the market.
Manufacturing Chinese models is the “new cost of market access” for global automakers, said Mike Dunne, whose consultancy, Dunne, specialises in Asia’s auto markets.
“Beijing’s not happy,” so authorities drew up a new set of rules that would require car makers to share their technology if they want to expand in China, said Dunne, who is writing a book on the history of General Motors in China.
Car makers won’t admit it’s happening because it would be “politically incorrect,” he said.
Nissan has released few details about the car it plans to sell under the Venucia brand with partner Dongfeng Motor, including the price. The company plans to open 100 dealerships next year to sell the car. Kimiyasu Nakamura, president of the Japanese automaker’s Dongfeng joint venture, acknowledged the possibility that the new car would “cannibalise” sales of Nissan’s entry-level Sunny. GM denied it was strong-armed into launching Baojun, saying it decided to create the brand four years ago to sell cars in China’s interior cities, where it sees great potential for growth.
“The Baojun 630 will address the growing demand across the country for affordable transportation,” said GM China President Kevin Wale. GM will make the Baojun, which translates as Treasure Horse, with joint venture partners Shanghai Automotive Industry and Wuling Automobile Cars bearing the Baojun badge will be produced at its factory in Guangxi in China’s southwest. PSA Peugeot Citroen CEO Philippe Varin said developing a third brand was “part of the deal” for its new joint venture with Chang’an Automobile Group, according to a report in the Financial Times in March.
Customised show
• THESE SO-CALLED “INDIGENOUS” BRANDS will only be sold in China and their prices are aimed at a segment of the market that is already crowded with cars from lesser known Chinese brands
• GM WILL MAKE THE BAOJUN , which translates as Treasure Horse, with joint venture partners Shanghai Automotive Industry and Wuling Automobile Cars bearing the Baojun badge
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