Brilliance Auto

Brilliance counts on exports to Europe to revive car sales

PUBLISHED : Wednesday, 15 June, 2005, 12:00am
UPDATED : Wednesday, 15 June, 2005, 12:00am

Brilliance China Automotive Holdings has set its sights on the European passenger car market to make up for falling domestic sales.

The company aims to sell 2,000 self-developed Zhonghua brand family cars to Germany this year, said a spokeswoman for Brilliance's car and mini-bus subsidiary Shenyang Jinbei Automotive.

It has appointed logistics services provider Eurogate as its dealer in Europe, which will start with the German market and gradually expand to other countries in the region, he added.

The 2,000 mid-market cars will form a large portion of the 6,500 vehicles the company is targeting to export this year to about 15 countries, mainly in Europe, the Middle East and Africa.

Brilliance's European export plan comes as it posted a 38 per cent fall in Zhonghua car sales year on year in the first five months of the year to about 4,600 cars, according to the spokeswoman.

Minibus sales fell about 15 per cent to 24,200 units, while sales of its mainland-produced BMW cars rose 35 per cent to 5,700 units.

Brilliance management said in April the company aimed to sell 20,000 Zhonghua cars this year, after sales plunged 57.1 per cent to 10,982 last year amid strong competition and a tightening of consumer credit by the government.

However, some analysts were sceptical of Brilliance's aggressive export plan.

'It is questionable whether the 6,500 target can be achieved as it takes time to set up distributorships, maintenance, after-sales service and meet regulatory requirements,' said Daiwa Securities head of China research Alex Fan.

The Shenyang Jinbei spokeswoman said the company had already exported 1,000 units in the first five months of the year and expects to receive a permit to export vehicles to Germany by September.

Vehicle sales in China rose only 4.57 per cent year on year to 2.27 million units in the first five months.

Profits plummeted 57 per cent in the first four months to 12 billion yuan, according to China Association of Automobile Manufacturers figures quoted by China Daily.

'The worst period for the mainland vehicle sector has probably passed, but future profitability will depend on whether raw material prices will come down, demand will pick up and when the price war will end,' Mr Fan said.

'In the meantime, concerns about overcapacity will remain the biggest overhang' for the sector, he said.