China's low-cost carmakers race up value chain

A growing fleet of Chinese carmakers that once attracted attention with low prices is moving up the value chain to compete in the mid-range market.

The trend was on display yesterday at the start of the Shanghai car show, with carmakers such as Great Wall, Changan, and Beijing Auto - who typically price their cars at below 150,000 yuan (HK$186,500) - presenting new models at prices closer to the mid-range mark of 200,000 yuan.

Japanese carmakers, especially smaller ones such as Mazda, whose market share in China has been squeezed by German rivals, know that they too will soon face challenges to their standard lines. Changan, a partner of Mazda and Ford, said it would inevitably become a competitor to its present partners.

"We first entered the market through low-end products. Then we replaced those with more high-end products and, step by step, we are moving our way up the product line," said Yuan Mingxue, general manager of Changan's international division. "I believe that in about five years we will be competing head-on with our partners."

Changan, which is launching five new models this year, including its Raeton SUV, said the new models would cost between 150,000 yuan and 180,000 yuan, in contrast to the sub-150,000 yuan average price for its older lines.

Haval, Great Wall Motors' spin-off, is also launching its H7 model - a premium version of its popular H6 SUV. While its price has yet to be fixed, it will be more expensive than the H6, which had a sticker price between 100,000 yuan and 120,000 yuan.