Auto Executives Respond to Threat of Chinese Expansion

As the Chinese automotive market expands – more cars were sold in China each month this year than the U.S., traditionally the world’s largest market for automobiles – the emerging Chinese brands will undoubtedly move into the spotlight. But how soon China’s automakers become competitive with the rest of the world’s automakers is open for debate.

The world’s most successful luxury car makers, BMW and Mercedes-Benz, aren’t surprised by the Chinese automakers’ attempt to break into the top tier of the automotive world, as evidenced by several new models at this year’s Shanghai auto show.

“It’s a natural progression,” said BMW global sales chief Ian Robertson at the show, “and the advantage that Chinese manufacturers have with the large local market is big. I never underestimate the competition.”

China’s Chery Automobile, Geely Automobile and Great Wall Motor all had luxury vehicles to display at the auto show.

“The question is how long it will take for Chinese brands to compete with carmakers from Europe, Japan and the United States,” said Ulrich Walker, head of Daimler Northeast Asia. “This will take time.”

Nissan’s Senior Vice President warned that it doesn’t take long for the improvements to come. “Thirty years ago, the image of Japanese cars was that they rusted,” he said. “So that’s how much things can change.”

Toyota recently overthrew GM as the world’s biggest automaker, and Japanese automakers Honda and Toyota consistently outrank American and German automakers for reliability and value in the United States.

The president of one of the most successful recent up-and-comers, Hyundai, said Chinese companies are already up to par. “They are very competitive, and expanding rapidly,” he said, pointing to 30 percent sales jumps for Chery and Geely in the first quarter. “Judging from their performance, they will grow in the future.”

Still, there are some who say the Chinese automakers’ recent successes are short-lived, and that the companies have a long way to go before they can truly compete worldwide.

A Japanese executive said that once Chinese buyers become more experienced, they will see the value of spending more money for reliability and value. “Once they see how easily some of these cars can break down, they may choose to pay a little extra for a more reliable car next time.” The executive asked to remain anonymous.

A GM executive said the Chinese have yet to prove they can establish and maintain luxury marques. “They just don’t have the brand image,” said Nick Reilly, the president of GM’s Asia Pacific operations. “It would be much more sensible for them to try to go into the lower end or the middle, and then grow from there to the upper end.”

Right now, Chinese cars are known more for copying other automakers’ designs than anything else. FAW Haima has ripped off several of Mazda’s models, including the Mazda2 and Mazda3, while BYD Auto’s M6 looks similar to Toyota’s Estima/Previa, and Geely’s GE is virtually a Rolls-Royce Phantom clone.

Despite their current gaffes and a debatable timeline, one thing is certain: the Chinese will catch up sooner or later, and when they do, automakers worldwide will be ready to compete.

Source: Reuters


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