Chinese automakers have begun looking to emerging markets, including Egypt, Indonesia and Ukraine as the market at home continues to cool down.
The lion’s share of Chinese autos being exported to these emerging markets are low-cost models like Great Wall Motors’ Haval SUV and the Panda minicar, made by Zhejiang Geely Holding Group Company.
Great Wall Motor vice president of overseas markets Xing Wenlin said, “The rapid growth phase of China’s auto market is coming to an end, and we see exports as one possible outlet for all the capacity we have built up. We need to go beyond the China market to survive.”
Although many of the low-end Chinese autos might not fare well in the U.S. and European markets, they’re of sufficient quality to satisfy the needs of many motorists in emerging markets. And with an average sticker price of around $6,300, they’re also affordable. Recently consumers in some Western markets, including Italy and Australia have begun to take notice of these no-frills models.
In 2010, Zhejiang Geely Holding Group Company acquired Volvo, and has begun to incorporate some of the its advanced technologies into its vehicles as a way of broadening their appeal to Western audiences.
Geely and Volvo Chairman Li Shufu said, “My vision is to sell outside China the same number of cars we sell within China.” This year, Geely expects to sell upwards of 450,000 vehicles worldwide. Of those vehicles, between 60,000 to 70,000 will be sold overseas.
A number of other Chinese automakers, including Chery Automobile Company and SAIC Motor Corporation have begun looking to overseas markets to maintain their dwindling sales numbers.
In the past, Western automakers were able to maintain their supremacy in the market, in part by refusing to share their design technology with others. Geely’s technology and product-development chief Frank Zhao says that much of that technology and design know-how is available to any automaker willing to pay for it.
After posting 30 percent increases in both 2009 and 2010, demand for light vehicles in China grew by a meager 2.5 percent in 2011 while exports rose by 50 percent compared to 2010 according to the China Association of Automobile Manufacturers. The vast majority of exported vehicles were sold in Algeria, Brazil and Russia.
Great Wall Motors’ vice president Xing said breaking into the U.S. market is “an ultimate objective.” But AutoPacific analyst Dave Sullivan says that objective may remain out of reach for the foreseeable future. Sullivan said, “The sheer cost of setting up a dealer network, building a brand… It is a significant amount of money and to do it for a new brand, it is very, very difficult.”