Carmakers step up drive on mainland
Global manufacturers to invest billions of dollars
Global carmakers unveiled ambitious investment plans during the Beijing Car Show yesterday as a way to meet rising vehicle demand and improve their market positions in the country.
Carmakers are set to pour billions of dollars into the mainland car industry and are employing different business strategies, such as enlarging production capacity and enhancing distribution networks, to increase market share.
'We expect China's automobile market will still record 15 per cent growth, although industry experts estimated an average 8 per cent year-on-year growth,' said Chrysler Asia chief executive Philip Murtaugh.
In order to tap the robust demand, some carmakers believe technology is the most important factor to lead the competition, especially as domestic brands are also gearing up with advanced models.
General Motors, the world's largest carmaker, plans to continue pushing hybrid engine technology in the mainland market.
The company, which has a joint venture with SAIC Motor Corp, will keep investing US$1 billion per year in the country.
'We're improving the fuel efficiency of cars in China and it is the place for breakthroughs in technology,' said GM chief executive Rick Wagoner.
Carlos Ghosn, president and chief executive of Japan's Nissan Motor, which has a joint venture with Dongfeng Motor, shares a similar view.
'We have a massive investment in exploring electric cars and we're negotiating with the government to introduce these cars in the country,' he said.
Mr Ghosn added that the mainland still had huge room for growth in vehicle sales. 'There are fewer than 100 car owners on the mainland for every 1,000 people. The United States has 800 car owners for every 1,000 people and other developed economies have 600 car owners for every 1,000 people,' he said.
In addition to promoting green technology, carmakers are seeking to boost production capacity.
Suzuki Motor, which has a joint venture with Chongqing Changan Automobile, will spend US$241 million to double its capacity. The additional capacity will allow the company to build 200,000 vehicles annually from next year.
Mitsubishi Motor Corp, which works with Hunan-based Changfeng Automobile, plans to increase engine production to 900,000 units in the next few years from 500,000 units. Beijing Hyundai, a joint venture between South Korea's Hyundai Motor and Beijing Automotive Industry Holding, recently launched its second plant on the outskirts of Beijing with an investment of US$1.2 billion. The company aims to double total capacity to 600,000 units by 2010.
High-end vehicle producers such as Bayerische Motoren Werke (BMW) of Germany are also looking at increasing output. The firm, which has a joint venture with Shenyang-based Brilliance China, will build a second plant in Liaoning.
'The plant currently produces 35,000 vehicles,' said Qi Yumin, the chairman of Brilliance China. 'We plan to produce 100,000 units within four years.'
Other carmakers are focusing on their distribution networks.
Daimler, Audi and Chrysler plan to add and integrate dealerships.
Robust demand means challenges, however, with the threat of pricing pressures and difficulties in enlarging market share.
'We should move in good directions because we don't want to be the lowest prices company,' said Mr Wagoner.
Investment plans unveiled by carmakers at the Beijing Car Show
Adding dealers on mainland
Has built a second plant with invesment of US$1.2 billion
Plans to triple production capacity by building a second plant
Integrating dealership network and seeking joint venture partner
Will add 20 dealers to meet demand growth
Planning to add capacity in the coming years
Going to build third plant in Chongqing
Pushing hybrid technology in mainland market. The company will invest US$1 billion annually on mainland
Will boost engine production to 900,000 from 500,000
Negotiating with the government to launch electric cars on mainland
Plans to spend US$241 million to double capacity in Chongqing