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World: How the Chinese are setting themselves up for success (Part 5: Mature markets)

April 20th, 2014 12 comments

Qoros 3 The Qoros 3 was unveiled at the Geneva Motor Show last April.

* This is Part 5 of 5 in my series on Chinese carmakers abroad. See also Part 1 (Africa)Part 2 (Latin America)Part 3 (Eastern Europe) and Part 4 (Asia) *

The first 4 Parts in this series have shown Chinese manufacturers securing the less developed markets in each region as springboards to expand further. Less developed means smaller and less sophisticated but also less regulated as far as pollution and security are concerned. These last two aspects have been the main barrier to the Chinese carmakers’ entrance in mature markets to date, and specific strategies have had to be developed to address this. This is why I am grouping all ‘mature markets’ in one article, independent of their geographic location.

Brilliance BS6 Crash Test 2007. Picture courtesy of autozeitung.deBrilliance BS6. This 2007 crash test put a dent into Chinese carmakers’ plans in Western Europe.

Chinese manufacturers have learnt this the hard way back in 2007 when disastrous crash tests for the Brilliance BS6 and Landwind SUV meant these two carmakers and all other Chinese manufacturers that were seriously thinking about setting shop in these regions had to postpone their plans. 7 years later, manufacturing quality has improved and there are a few mature markets where the Chinese have started to make their mark, among them Australia, Italy and the UK. The launch of the new Qoros brand by Chery at the 2013 Geneva Auto Show is another important milestone even though European sales of the brand will remain limited.

Great Wall V200 Australia October 2012The Great Wall V-Series is the first Chinese model to break into the Australian Top 50

The main success story so far for a Chinese manufacturer in a mature market is Great Wall in Australia. You can see the full details in my article Australia: An interview with Daniel Cotterill from Great Wall and hear the experience of a very happy Great Wall customer met in Bourke last week here. Great Wall launched in Australia in 2009 and finished 2012 as #17 brand with sales up 27% to 11,006 units and 1% share, totaling over 30,000 to-date. Even though these figures seem small, they are based on only two models and as a result it is actually one of the most successful car brand launches in the country in the past decade, as the market is already completely saturated with over 50 brands present, way more than in the US which is 14 times bigger…

The Great Wall V-Series pick-up (aka Steed) is the first Chinese model to break into the Australian Top 50, finishing 2012 at #49 with 7,490 sales, up 35%, and the Great Wall Australian range has only one other model, the Hover SUV.

Even if 2013 and 2014 year-to-date figures have been disappointing, one of the key factors in Great Wall’s success in Australia has been to embrace the brand’s provenance rather than hide it. Both their slogan ‘The Great cars of China’ and strong positioning on price are unapologetic. The main element to remember here is that by focusing on a sturdy workhorse (the Steed pick-up truck), Great Wall is building itself a solid reputation of reliability under the harsh Australian climate which is at polar opposites with the likes of Hyundai when they first launched there, as evidenced by the healthy amount of repeat business the brand is already experiencing. Chery, Geely and Foton are also present in Australia but not successful at this stage.

DR1 Europe April 2011The Riich M1 is assembled and sold in Italy as the DR1

Italy is the only mature market to assemble Chinese models. Chery cars are assembled by the DR Motor Company since 2007 in Macchia d’Isternia, North of Naples. The range is composed of the DR1 (Riich M1), DR2 (Chery Kimo) and DR5 (Chery Tiggo) however sales dropped from 2,938 in 2011 to just 710 in 2012 and 435 in 2013.

The Great Wall Hover ranked #32 in Italy in December 2011. More of a freak event though.

Great Wall also imports in Italy which became the first Western European country to welcome a Chinese model within its monthly Top 50 in December 2011 when the Great Wall Hover ranked #32. This was a freak event though as it seems Great Wall sold all their stock that month to dealerships but continued to sell to consumers all through 2012 even though official sales figures were down from 1,675 in 2011 to just 10 (!) in 2012, before going back up to a still extremely shy 235 in 2013.

The MG6 has disappointed in the UK so far.

The UK is the third mature market where the Chinese are gaining valuable experience. MG, now owned by SAIC, was reintroduced there in 2011 with the MG6 albeit with disappointing results: the model ranked only #203 with 772 sales for its first full year in 2012 and was down 82% over the first Quarter of 2013. Inspired by its Australian success, Great Wall soft-launched there in 2012 with the Steed pick-up and finished the year as #15 LCV brand with 476 sales and 0.2% share. Very small numbers still but the footprint is there.

Shanghai Englon TX4 Shanghai Englon TX4

Another angle Chinese manufacturers are starting to pursue is the delivery of electric public transport to big metropolitan cities. BYD is set to deliver 50 of its electric hatchback e6 to operate as London taxis while the first batch of 45 e6 has now arrived in Hong Kong, and will start manufacturing electric buses in California later this year. But the biggest development in that area happened last February when Geely acquired iconic London Taxi maker Manganese Bronze. Geely was already manufacturing and selling the London Taxi in China as the Shanghai Englon TX4 and is now looking into developing an electric version.

Qoros logo. Picture by theglobeandmail.com

The last element of the puzzle of Chinese carmakers in mature market is a rather puzzling one indeed. The new company Qoros is a joint-venture between Chery and Israel Corporation which was created in 2007 and has put together a European team of motoring executives and experts with extensive experience from mainstream brands to lead it. Gerd Volker Hildebrand, creator of the modern Mini design, came up with the first Qoros model, the Qoros 3, which was unveiled at the 2013 Geneva Motor Show along with two concept cars announcing the future of the brand.

Qoros sales are only now starting in China – very slowly for now with just a few hundred units so far in 2014. However, far from announcing the long-dreaded large scale invasion of Europe by Chinese manufacturers, Qoros say their main target is… the Chinese market, where consumers like buying European products but don’t like diesel. As a result, no diesel motorisation is planned in any of the future models, which considerably reduces their appeal in Western Europe, and Qoros predicts that only 10% of its sales will actually be in Europe. Its price point between 16,000 and 20,000 euros place it well above the budget brands currently selling like hotcakes there, but could be an interesting test to see whether European consumers are ready to buy ‘expensive’ Chinese cars. More details on Qoros’ launch plans in Eastern and Western Europe here.

Last bit of information, all Qoros cars will be made in Changshu in China, in a new factory that will initially have a 150,000 cars/year capacity, with the possibility to extend to 450,000/year. Not a single Qoros will be made in Europe. So in other words, Qoros is a Chinese brand that wants to sell European-designed models made in China to Chinese consumers thinking they are buying a European car. Tricky.

This concludes our series about Chinese carmakers abroad. I hope you enjoyed it!

Categories: China, STRATEGY, World

Strategy: How the Chinese are setting themselves up for success (Part 4: Asia)

April 19th, 2014 7 comments

Chevrolet Enjoy India May 2013. Picture courtesy of motoroids.comThe Wuling Hongguang launched this month in India as the Chevrolet Enjoy.

* This is Part 4 of 5 in my series on Chinese carmakers abroad. See also Part 1 (Africa)Part 2 (Latin America)Part 3 (Eastern Europe) and Part 5 (Mature markets) *

In the first 3 parts of this series we observed that Chinese carmakers have managed their expansion into Africa, Latin America and Eastern Europe by securing less developed markets and using them as anchor points for a more widespread presence in these regions. In this context it’s interesting to note that in their own ‘backyard’, Asia, the same strategy has not been met with the same success, with only a handful of small markets in the region ‘cracked’ so far. However as you can expect, Chinese manufacturers are now busy working on correcting that situation, so they can finally surf on what is currently one of the most dynamic car markets in the world.

Chery QQ Myanmar 2012. Picture by Ryusuke IkedaChery QQ in Yangon, Myanmar

In Myanmar, as the market becomes normalised, all 1,000 Chery QQ imported by the Ministry of Industry sold out within a week in December 2012 in spite of seeing their original price more than double once various duties, taxes and licensing fees were added. The QQ is now a common sight in the main city in the country, Yangoon, mainly as taxis.

Chery M1 in Luang Prabang, Laos, January 2011.

Laos is the only other South-East Asian market where Chinese carmakers seem to be enjoying very healthy sales, with the Chery M1, QQ & Tiggo, JAC Tongyue and BYD F0 all noticed in the streets of Luang Prabang my dear Mum and Dad during their last trip there in January 2011.

Pyeonghwa Samchunri North KoreaThe Pyeonghwa Samchunri should be the best-selling vehicle in North Korea.

Neighbour North Korea is potentially the market in the world where the Chinese dominate the most, thanks to government links between the two countries. I estimate this based on the observation of rare videos of the streets of the capital Pyongyang. Local manufacturer Pyeonghwa assembles under license the Samchunri (aka Jinbei Haise) which should be the best-seller in the country, Brilliance BS4, FSV and Huanghai Shuguan, romantically renamed Ppoggugi 4WD. More recently, a batch of 200 Hawtai Lusheng E70 taxis were imported from China.

Micro Panda Sri Lanka February 2013Micro Panda in Sri Lanka

A little more to the West in Sri Lanka, Geely has associated with local brand Micro Cars to assemble and sell the Panda and MK (renamed MX7) to relative success. Micro Cars also assembles and sells Great Wall and Jinbei vehicles and ranked #2 in the country in February 2013. In India, Chevrolet launched the Enjoy in 2013 which is in fact a rebadged Wuling Hongguang and Chery assembles and sells the QQ in Pakistan, however no sales figures are available so far.

Change Freedom Dushanbe TajikistanChangHe Freedom in Dushanbe, Tajikistan

Another part of the world completely bypassed by most car manufacturers except the Chinese is all the Central Asian former Soviet nations. Even though official data is still rare for these countries, anecdotal evidence shows they are present there en masse. For example, did you know that judging by YouTube videos the Changhe Freedom must have been the best-selling car in Tajikistan for a couple of years before such minivans were abruptly banned over safety concerns in 2010? Lifan has been assembling cars in Azerbaijan since 2010 and the MG3 can already be noticed in the streets of the capital Baku. Finally Geely will export part of its Belarus production to Kazakhstan from 2014 onwards…

Geely MK2 Indonesia April 2012Geely MK2 taxi in Bali, Indonesia April 2012

All other significant markets in the region have resisted the Chinese assault so far. Chery apparently assembles cars in Indonesia, Malaysia, Taiwan, Thailand and Vietnam but their only claim to fame to-date has been the 27th place of the Chery Eastar in Malaysia in 2010. Geely assembles in Indonesia but the only models I saw in two weeks in Bali were a few MK2 taxis and one single Panda.

chana-era-cv6-changan-compactMalaysian advertisement for the Chana Era CV6

Hafei launched the Brio as the Naza Sutera in Malaysia in 2006, then renamed it Forza in 2007 without luck, while Chana’s attempt at launching the Era CV6 and CM8 there in 2009 also failed. Lifan assembles in Vietnam since 2007 and I did see one 520 sedan in Sapa when I travelled there but it seems DongFeng is having much more luck in the heavy commercial vehicle sector there. The situation is similar in Iran where Chery and Lifan have been assembling cars since 2006, and even though the Fulwin 2 hit a record #4 in April 2013, the volumes remain very small.

Manila Auto Show Foton2Foton Thunder at the Manila Motor Show, April 2013

However the Chinese carmakers’ situation in Asia may change rather quickly, judging at how dynamic the entire Chinese delegation was at the Manila Auto Show in the Philippines one year ago, as I detailed in my article Manila Auto Show 2013: Has the time come for Chinese manufacturers? According to Leon Herrera, CEO of Chery Motors Philippines, Chery is “aiming at a spot in the Top 5 at the end of 2013 year and between 10 and 15% of the market” by 2015 which is exceptionally ambitious given this is Chery’s second attempt at cracking the Filipino market after the first one failed.

Paradoxically, their proximity with Asia seems to have worked against Chinese car manufacturers so far, giving a surprisingly less positive balance sheet in a region where defiance towards Chinese domination may have hindered their progress. Potentially not for too much longer. Where there’s a will, there’s a way?

Stay tuned for the final Part of this series about Mature markets!

Categories: China, STRATEGY, World

Strategy: How the Chinese are setting themselves up for success (Part 3: Eastern Europe)

April 19th, 2014 3 comments

Vortex Tingo Russia 2012TagAz has been manufacturing the Chery Tiggo in Russia – rebranded Vortex Tingo.

* This is Part 3 of 5 in my series on Chinese carmakers abroad. See also Part 1 (Africa)Part 2 (Latin America)Part 4 (Asia) and Part 5 (Mature markets) *

As illustrated in Africa and Latin America, Chinese manufacturers have been working extra-hard under the radar to secure less developed markets that will form the bulk of global car sales growth over the next couple of decades. Their approach to Eastern Europe is very similar. There are currently three Chinese assembling hubs in the region – in Russia, Ukraine and Bulgaria – acting as a very convenient springboard for further expansion throughout the continent, including all the ex-USSR nations and potentially Western Europe in the longer-term.

Police Lifan Solano in Moscow, Russia

Even though their market share is limited to just under 4% for now, Russia is currently the overseas country delivering the largest volume for Chinese manufacturers, and even become the first overseas country to buy more than 100,000 Chinese passenger cars annually with 102,389 sales in 2013. That’s up a whopping 23% on 2012 in a market down 5%. Import tariffs are too high to allow sizeable direct imports from China, so the 4 main Chinese carmakers present here have already all invested very significantly to assemble locally and as a result are registering extremely strong growth rates in 2013: Lifan is up 34% to #24, Geely up 55% to #25, Great Wall up 39% to #28 while Chery is slower at +4% and #29.

Chery Amulet Russia 2007The Chery Amulet was one of the first successful Chinese models in the region.

Chery has the longest (and most troubled) history in Russia: the Chery Amulet ranked within the monthly Top 20 as early as 2007 but the brand saw sales plummet on the back of poor quality perception, to which Chery responded by rebranding their cars Vortex. Since last year though, the Chery brand is back in Russia with encouraging success. Model-wise, the Great Wall Hover is the best-selling Chinese vehicle in Russia in 2013, up 37% to #41, followed by the Lifan X60 (#42), Geely Emgrand (#46), Geely MK/MK Cross (#54), Lifan Solano (#67) and Chery Tiggo (#93).

Geely CK Ukraine March 2012The Geely CK has managed to top the Ukrainian models ranking 3 times already.

Although Russia does not qualify as a “less developed” market, its structure heavily weighted towards low-cost models like the Lada range and Renault-branded Dacias make it one of the biggest opportunities for Chinese manufacturers worldwide. However in Eastern Europe too, it’s in the developing car markets that we see the Chinese grab their highest market share. Ukraine is the only market in the world with regular available sales data outside China to have repeatedly crowned a Chinese model in the monthly rankings. The Geely CK ranked #1 there in July 2012, December 2012 and January 2013 and finished 2013 in third position.

Geely SC7 Belarus 2013The Geely SC7 will be assembled in Belarus later in 2013

But the CK is not a one trick pony: Geely was simply the most popular brand in Ukraine in January 2014 with 12.7% market share above Toyota (11.4%)! The Geely Emgrand EC7 peaked at #2 in September 2013, the MK-2/Cross was #15 in March 2013 and the MK was #19 last September 2012. All in all Chinese carmakers currently command around 10% of the Ukrainian car market.

ZAZ Forza Ukraine 2013Chery sells the Fulwin 2 as the ZAZ Forza in Ukraine

Other Chinese actors in Ukraine include Chery, 25th brand in 2013, BYD up 144% to #27 Great Wall at #32 and MG at #34, placing the MG 350 at #77 in April 2013. Another example of Chinese manufacturers immersing themselves in the local culture, Chery manufactures at the local ZAZ plant from CKD kits and sells the Chery Fulwin 2 as the ZAZ Forza which ranked among the Ukrainian Top 10 from May to August 2012.

Great Wall Voleex C10 Bulgaria June 2012bBulgarian police has already adopted the Great Wall Voleex C10

Another milestone event for Chinese manufacturers in Eastern Europe was the opening of the Great Wall factory in Lovech, Bulgaria, in February 2012. This is the very first automotive plant set up in Bulgaria and as a result Great Wall has played the ‘made in Bulgaria’ card to the fullest since, with great results: it was #10 brand in the country over the first 6 months of 2012 and quickly went up to #2 overall with 10.5% share below just Volkswagen in October and December 2012, placing the Steed pick-up in pole position that same month, the Voleex C10 at #2 in April 2013 and the Hover at #6 in December 2012. 2013 was a little more discreet however for Great Wall in Bulgaria as a whole.

Great Wall’s Bulgarian hub is planned as the focal point for their expansion throughout Europe, and Bulgarian exports have already started to trickle down in sales stats for countries like Macedonia where in December 2012 Great Wall was the #10 brand with 4.7% share and the Voleex C10 was #5 model at 3% share. This expansion will likely reach more neighbouring markets in the near future, once again the less mature ones like Serbia (where Chery ranked #25 in 2012), Bosnia, Kosovo, Montenegro and potentially Albania and Moldova.

A fourth Chinese assembly hub in the region kick started in 2013 in Belarus, where Geely has set up a joint venture with Belarusian company BelDzhi and is has launched the locally assembled SC7, ranking 19th overall in 2013 with 1.2% of the market and pushing Geely up to #18 brand with 1.5% share for its first year in market. The assembly facilities, located in Zhodino and Borisov, are scheduled to produce 60,000 cars/year for the first three years, with capacity potentially doubling in 2017. From that 4th hub, exports towards Russia and Kazakhstan are on the cards.

Launching from their 4 hubs in Russia, Ukraine, Bulgaria and Belarus, Chinese carmakers are getting ready to expand further in Eastern and Western Europe in the very near future. Russia will remain by far their biggest opportunity in the region with local assembly plants already in place and ready to gear up to surf on the growing demand for affordable cars in that market.

Stay tuned for Part 4 of this series: Asia!

Strategy: How the Chinese are setting themselves up for success (Part 2: Latin America)

April 18th, 2014 5 comments

Chery QQ Brazil May 2011Brazilian Chery QQ

* This is Part 2 of 5 in my series on Chinese carmakers abroad. See also Part 1 (Africa)Part 3 (Eastern Europe)Part 4 (Asia) and Part 5 (Mature markets) *

If Chinese carmakers have started exporting to Africa in the early 00′s, they set foot in Latin America even earlier, with JAC starting to export trucks to Bolivia back in 1990. Similarly to the strategy they adopted in Africa, Chinese manufacturers have initially focused on the less developed car markets in the region. They are now in the process of stepping up their involvement by launching in the bigger, more mature markets like Argentina and Brazil.

FAW S80 Uruguay 2013FAW S80. FAW is the 10th most popular brand in Uruguay vs. #16 at home in China.

In fact, the foundations the Chinese have built in secondary Latin American car markets are potentially their strongest in the world so far. The first logical anchor points in the region are Uruguay and Paraguay, both located between Argentina and Brazil and all part of the Mercosur, which makes it easier to export towards those two powerhouses as local assembly with 30% to 50% share of local components currently receive zero-tariff status inside the Mercosur. As a result both Chery and Lifan (40,000 units/year capacity) have assembly factories in Uruguay while Dongfeng has one in Paraguay.

In Uruguay, 26 of the 54 brands on sale are Chinese, capturing 23.3% of the market in 2013, up from 19.5% in 2012 – their highest country penetration outside of China and actually on par with the penetration of Chinese passenger cars within China! There are 8 Chinese carmakers in the Uruguayan Top 20 and 2 among the Top 10: Chery is 5th with 5.9% share and is even up to #2 in February 2013 with almost 10% of the market below just Chevrolet and above Volkswagen! FAW is 10th at 3.3%, followed by Geely at #13 and 2.7% (25 units short off beating Toyota!), BYD at #15 and Great Wall at #16.

DongFeng Mini Pick-up Paraguay 2012The DongFeng Mini Pick-up is now produced in Paraguay.

In Paraguay, the Chinese hold 9% of the passenger car market but 59% of the truck market! There were 10 Chinese among the Top 30 best-selling brands in 2013, led by ChangAn up 119% to #11, Haima up 37% to #16, Great Wall up 9% to #17 and Foton up 43% to #19.

Geely CK Cuba October 2011Geely CK Police car in Cuba

Peru is another very important hub for Chinese manufacturers in Latin America: it is one of the fastest growing car markets in the world, with the last 4 years all being new records topped up by 210,326 registrations in 2013, and is “facing” China on the Pacific Ocean, making it an enticing port-of-entry into the continent. Roughly 15% of the Peruvian car market go to Chinese models, and latest data shows JAC up 80% year-on-year in 2013 to #10 brand, Great Wall down 8% to #15, Chery up 8% to #17, Foton up 1% to 320 and Lifan up 73% to #20.

Local analysts even estimate that as much as 96 Chinese car brands (who knew there even were that many?!) are sold in Peru both formally in dealerships and informally by rogue vendors…

DongFeng S30 Venezuela February 2013The DongFeng S30 was the best-selling model in Venezuela in December 2012…

Venezuela is a slightly different situation because the exchanges with the rest of the region are more patchy, so Chinese carmakers’ success so far has stemmed either from local production – Chery has started assembling cars there in 2011 but no figures are available – or direct agreements with the Chinese government, like the unprecedented 4,000-unit batch of DongFeng S30 imported in late 2012 which enabled the model to simply take the lead of the sales charts in December of that year. The S30 went on to lodge 5 consecutive months within the Top 5 best-sellers in Venezuela across 2012 and 2013.

Chevrolet N300 Colombia December 2011Chevrolet N300

If we go up one notch to Chile - yet another record-breaking market at 378,000 sales in 2013, Chinese brands have a 11% market share (up from 7% in 2012!), with no less than 19 of them in the Top 50. They are led by Great Wall at #13, Chery at #20, JAC at #21, BYD at #26, Geely at #27, ChangAn at #28 and Dongfeng at #29. In Colombia, Chery is the first Chinese brand to have ever broken into the annual Top 10 at #10 in 2013 with 4,421 sales and 1.5% share. JAC (#13), Dongfeng (#17), Hafei (#21), Great Wall (#23), Geely (#29) and Zotye (#30) also rank inside the Top 30. Ecuador (with Chery ranking 11th and Geely 12th in 2013) and Bolivia are two other developing Latin American markets likely to have seen a recent flood of Chinese cars.

The Caribbean region is yet another under-developed zone most carmakers traditionally sidestep, except the Chinese. Geely regularly ships cars to Cuba, the last batch from October 2011 was composed of 1,300 Geely CK (now a common sight in La Habana as a police car) and 250 Emgrand EC7. In the Dominican Republic, a few Chinese models have already managed to break into the Full Year Top 20 like the BYD F3 (#9 in 2010), the DongFeng Cargo Van (#14 in 2011) and the Jinbei Haise (#18 in 2011).

JAC J3 Brazil December 2011Brazilian JAC J3

This all means that Chinese carmakers have now established a solid footing in almost all Latin American markets, working extremely hard to secure the foundations for long-term success in the region. They are now using these stepping stones to access Argentina (all-time high 955,000 units in 2013) and Brazil (record 3.6 million units in 2012), where the volumes really are. In Argentina, Chery has started assembling a limited amount of cars locally and as a result has seen a few models make their way up the ladder: both the Chery QQ (#47) and Tiggo (#53) reached their highest ranking so far in the country in March 2013.

In Brazil, JAC broke with the Chinese tradition and chose to enter the market all guns blazing on 18 March 2011, which they called J-Day. They simultaneously inaugurated 50 dealerships across the country and hired a famous TV presenter, Fausto Silva, as their ambassador in a multi-million dollar TV campaign.

JAC J2 Brazil February 2013. Picture courtesy of autossegredos.com.brThe JAC J2 is now the best-selling Chinese model in Brazil (#64 in April 2013)

However JAC’s strong start in the country has since fizzled out. The JAC J3 hatchback (#36) and J3 Turin sedan (#56) both hit their highest ranking only 3 months after launch in June 2011 while in the meantime the Chery QQ peaked at #36 in September 2011, but 2012 was harsh: J3 at -37%, J3 Turin at -40% and QQ at -25%, on the back of increased levies on imports. 2013 wasn’t better with JAC down 11% and Chery down 45% as a whole. In 2013 the JAC J2 became the best-selling Chinese model in Brazil but it only ranks 87th. Now both manufacturers realise their success in Brazil lies in local assembly: Chery is reportedly building a 150,000 annual unit-production facility in the São Paulo state while JAC is set to open a 100,000 annual vehicle-plant in the state of Bahia in 2014.

A very strong base in Latin America’s developing markets should ensure Chinese manufacturers surf on these markets’ predicted explosive growth in the next coming decades. The next challenge is to manage to crack more mature markets like Brazil and Argentina and this will require a much more significant level of investments in the form of large scale manufacturing operations. But the rewards could be priceless: thanks to its brand-new factory producing models tailored to Brazilian tastes, Hyundai has tripled its market share in the space of a few months… No doubt the Chinese are watching with tremendous interest.

Stay tuned for Part 3 of this series: Eastern Europe!

Categories: China, STRATEGY, World

Strategy: How Chinese carmakers are setting themselves up for success (Part 1: Africa)

April 18th, 2014 8 comments

Fennec fox. Picture courtesy of Fransisco Mingorance:National Geographic Traveler Photo ContestLike this fennec fox, Chinese carmakers have been walking against the wind in Africa. And it’s worked.

With the Beijing Auto show approaching fast, I though it would be timely to publish an updated version of my 5 Part strategy study of how successful Chinese manufacturers are abroad. Part 1 is Africa.

* This is Part 1 of 5 in my series on Chinese carmakers abroad. See also Part 2 (Latin America)Part 3 (Eastern Europe)Part 4 (Asia) and Part 5 (Mature markets) *

For the first time in the history of car manufacturing, Chinese carmakers sold 1 million cars outside of China in 2012, and estimates show chances are they have repeated that feat in 2013. Chinese manufacturers are now relying more and more on export markets to boost their bottom-line, especially as conditions have worsened for local passenger cars at home over the last couple of years. However as I described in my article “China: How local brands may finally find their mojo at home“, the Chinese are learning how to sell low-cost overseas and applying these strategies at home, making themselves more competitive in the process.

In fact, while the long-dreaded Chinese ‘invasion’ of the West European and American car markets is still a long way off, Chinese manufacturers have been working extra-hard under the radar to secure less developed markets that will form the bulk of the global car sales growth over the next couple of decades.

And this is why they will win.

Speranza A516 EgyptSperanza A516 in Cairo, Egypt

First case in point, Africa.

Apart from Toyota, Hyundai and a bunch of other Japanese manufacturers, no one currently has a lot of time for a continent that is still finding its way into development. Except the Chinese, who started assembling cars there almost a decade ago, as part of a push to be deeply involved in the infrastructure building of the continent. So we’re not just talking cars, but roads, rail tracks, mining and much more.

Egypt was the first cab off the rank when Chery used the Cairo plant previously run by Daewoo to assemble its cars under the Egypt-exclusive Speranza brand in 2004 – apparently because the Chery brand suffered poor quality perceptions after an earlier launch there. Success: Speranza was the 4th most popular passenger car brand in Egypt between 2008 and 2011, selling more than Toyota! Successful models include the A516 (#9 from 2007 to 2009) and the Tiggo (#14 in 2011). Since 2012 however, other Chinese manufacturers have stepped up a notch in Egypt…

Golden Dragon Haice Egypt 2012The Golden Dragon Haice was the best-selling Chinese model in Egypt in 2012.

The Golden Dragon Haice managed to rank as high as #6 in September 2012 and finished the year as the best-selling Chinese model at #15, and the Geely Emgrand EC7 has done much, much better, finishing the year 2013 in third position overall with almost 5% of the market on its own! King Long, Brilliance and JAC models have also started to appear within the monthly Top 30.

Holland Car Abay V2Holland Car assembles the Abay (aka Lifan 520) in Ethiopia.

In Ethiopia, Lifan and JAC have cooperated with Holland Car, the country’s first car brand, to assemble models locally including the Holland Car Abay (a rebadged Lifan 520), Tekeze (JAC Tongyue) and Awash (JAC B-Class), all named after Ethiopian rivers. Since 2010 Lifan assembles cars under its own name in the country and has recently introduced the X60 SUV. No sales data for that country so it’s hard to gauge their success (not as high as Lifan would want according to somalilandpress.com) but a second example of clever re-branding to fit the local culture as a first step.

Foton Slip SUP Kenya 2012The Foton SUP is assembled in Kenya since 2011.

In Kenya, Foton launched its first domestically produced truck, the SUP pick-up, in June 2011 using an existing local factory, and has opened its own US$50m assembly plant in Nairobi in March 2012 with a capacity of 10,000 annual units. Chery is also thinking about a Kenyan plant, initially limited to produce 1,000 units in 2013. As a result, Chinese manufacturers now hold 20% of the Kenyan car market…

Geely Emgrand EC8 Kuwait. Picture courtesy of qabaq.comGeely Emgrand EC8 in Kuwait

Either from these 3 assembling hubs or through straight exports from China, Chinese carmakers are organising their expansion towards other African countries. The Egyptian hub makes it more practical to export to Libya, Algeria, Sudan, Syria, Jordan, Saudi Arabia, Kuwait, the UAE and Iraq notably, where the Great Wall Deer seems to be particularly successful. Another potential hub for the region could be Iran where Chery has been assembling cars since 2006, with the Fulwin 2 hitting a record #4 last month.

JAC Tojoy MadagascarJAC was the #2 most popular brand in Madagascar at the end of 2012.

Ethiopia and Kenya can also be used as relays to Tanzania, Mozambique or Madagascar where some Chinese carmakers already have a solid presence: JAC was up to #2 brand with over 8% share over the third quarter of 2012 below only Nissan, and Great Wall was 7th in Q1 2013. Further West, Chinese carmakers now hold 20% of the Senegal and Cote d’Ivoire markets, with latest Cote d’Ivoire data showing Great Wall at #10 in 2010. The logical next step in Western Africa for Chinese car makers would be assembling cars in Nigeria…

Assembling cars in Nigeria would enable them to carve up a significant market share there as well as in neighbouring Ghana, Cameroon, Gabon, Mali and Burkina Faso, all at various stages of development but destined to grow fast in the next decade and beyond. South Africa also seems to be a missing link right now, however when you realise that it is currently the only mature market on the continent, it’s easier to understand why the Chinese haven’t spent too much energy trying to crack it yet. I will spend more time talking about Chinese carmakers’ strategies in mature markets in Part 5 of this series.

ZX Auto GrandTiger Libya 2011aZhongXing/ZX Auto GrandTiger in Libyan Civil War outfit

Another way Chinese models have come under the spotlight in export markets has been through government agreements, notably in Libya, albeit in a totally unexpected way (you also will see its impact on the Cuban car market in the next installment of this series). During the 2011 Arab Spring, Libyan rebels got their hands on a batch of 5,000 ZX Auto GrandTiger pick-ups that the government had recently received and fit their heavy artillery on them, catapulting the vehicle onto worldwide TV screens for a solid 6 months. A marketing opportunity that ZX Auto fully embraced, boasting about its reliability and featuring the Libyan civil war on giant LED screens at the 2012 Beijing Auto Show (see the full Libya article here).

Stay tuned for Part 2 of this series: Latin America!

Categories: Africa, China, World

World Full Year 2013: Discover all the #1 models in 160 countries!

April 13th, 2014 No comments

Toyota-Hilux 2013.-Picture-courtesy-of-saudishift.com_The Toyota Hilux is #1 in an estimated 35 countries.

* See the full list of 58 top ranking models in the world by clicking on the title! *

Now that we have official Full Year 2013 sales data for over 100 countries in the world, I can share with you the list of all models that have managed to rank #1 in at least one country this year. This list is exclusive to BestSellingCarsBlog, you will not find it anywhere else! To refresh your memory you can see the 2012 summary hereNote this is not a reflection of the highest worldwide sales volumes which will be the object of a future post, only how many countries a specific model ranked #1 in. If no FY2013 data is available, the most recent data is used and for about 60 countries the #1 spot is estimated based on thorough observations of the streets of those countries.

Toyota Prado UAE 2013. Picture courtesy of crankandpiston.comThe Toyota Prado is #1 in an estimated 6 countries worldwide.

Toyota places no less than 11 models in pole position in at least one country, compared to 10 in 2012 and adding up to 73 countries topped: nearly half of all markets in the world!  The Toyota Hilux is still by far the model to rank #1 in the most amount of countries: an estimated 35 (vs. 31 in 2012), albeit including 23 in Africa where the volumes are very low. Out of the estimated 35 countries where the Hilux is potentially #1, 8 have been confirmed with official data.

Skoda Octavia World 2013. Picture courtesy of zr.ru5 nations have succumbed to the charms of the Skoda Octavia, 4 of them in Eastern Europe.

The Toyota Corolla is estimated to be #1 in 14 countries, including 4 confirmed, followed by the VW Golf which thanks to its 7th generation is now #1 in 13 countries vs. 10 in 2012, 10 of them confirmed and all in Europe – the most confirmed #1 countries of any cars in the world. We then have the Toyota Land Cruiser and Prado both #1 in 6 countries and the Skoda Octavia #1 in 5 nations, all confirmed. The Dacia Logan and Toyota Yaris improve to 4 countries while the Chevrolet Sail goes from #1 in one country in 2012 (its first annual #1 ranking) to 3 this year.

Hawtai Lusheng E70. Picture courtesy of wautom.comThe Hawtai Lusheng E70 is the only Chinese model to rank #1 outside China (estimated #1 in North Korea).

Notable new members of the #1 club in 2013 include the Kia Picanto (#1 in Israel and Lebanon), Audi A4 (Monaco), Chevrolet Spark: (Uruguay), Dacia Dokker (Bulgaria), Fiat 500 (Lithuania), Fiat 500L (Serbia), Hawtai Lusheng E70 (estimated #1 in North Korea), Honda CR-V (Estonia), Lada Granta (Russia), Toyota Aqua (Japan), Wuling Hongguang (China) and ZAZ Sens (Ukraine).

Previous year: World Full Year 2012: All the #1 in 170 countries!

Full Year 2013 list of 58 top ranking models and where they are #1 below.

By and large and especially in Africa, reliability and safety play a big role in determining which cars are the best-sellers. In case of a crash, you can always get road traffic accident claims advice.

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Categories: World

World Full Year 2013: Total sales now available for 143 countries!

April 13th, 2014 10 comments

Astana Kazakhstan. Picture courtesy of Eric LafforgueKazakhstan is the fastest growing car market in the world. Photo © Eric Lafforgue

* See the Top 50 biggest car markets in the world by clicking on the title! *

Thanks to OICA I can share with you the overall Full Year 2013 sales figure for 143 countries in the world! I have created a Top 50 biggest markets ranking which is a vast improvement on the Top 20 I published a while ago. Please note this new ranking now classifies countries based on their overall vehicle sales. That’s Passenger Cars and Commercial Vehicles, including Light, Medium and Heavy ones, putting all countries on a level-playing field (some countries traditionally report monthly PC car sales only and other overall sales). The files released by the OICA (and linked to below) also feature Passenger Cars only and Commercial Vehicles only figures so you can see the split.

Shanghai night traffic. Picture courtesy of Jacqtai via FlickrIn 2013, China became the first new car market to pass 20 million annual units. It should pass 25 million in 2015. Photo © Jacqtai.

Based on this data, a record 85,393,803 new vehicles were sold worldwide in 2013, up 3.9% on 2013. This is the 4th consecutive record year for worldwide sales after the 74.89 million reached in 2010, 78.09 million in 2011 and 82.17 million in 2012. At this rate, the 90 million units should be passed in 2015 and the 100 million in 2017 potentially. Asia/Oceania/Middle East sales are up 5.8% to reach 40.45 million or 47% of the worldwide marketplace, America is up 5.6% to 25 million (NAFTA up 7.1% and Central & South America up 1.5%), Europe is down 2.1% to 18.28 million and Africa up 3.3% to 1.65 million.

Burj Khalifa Dubai, UAE. Picture courtesy FlickrNew car sales in the United Arab Emirates are up 16% in 2013. Photo © cheng-long chan

Country-wise, it’s a slightly different picture as the Top 20 I published earlier as now all vehicles are included for all countries. China still reigns supreme with a record 21,984,100 units (+14%) followed by the USA at 15,883,949 (+7%) and Japan stable at 5,375,513. Brazil (3.77 million), Germany (3.26 million), India (3.24 million) and Russia (2.95 million) all lose ground but their figures are boosted by the inclusion of Commercial Vehicles. The UK is still up 11% to an updated 2.59 million units.

Quebec Canada. Picture courtesy of cntraveler.comCanada new vehicle sales hit a new record in 2013 at 1.78 million units.

Canada at 1,779,860 sales, Indonesia at 1,226,199 (+10%), Australia at 1,136,227 and Argentina at 955,023 (+14%) all reach all-time record heights as does Turkey at 893,124 units (+9%). Other great gainers now include Chile up 9% to #26, the United Arab Emirates up 16% to #27, the Philippines up 15% to a record 212,682 registrations, Kuwait up 9% to #44 and, best of all, Kazakhstan up a gargantuan 74% to an all-time high 165,710 sales and carving itself a spot among the 50 biggest car markets in the world for the first time at #43.

Previous post: World 2013 – The 20 biggest car markets: China, Indonesia, Canada, Australia & Argentina hit records

Full Year 2013 Top 50 biggest car markets and data for 143 countries below.

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Categories: World

World: One million Renault/Dacia Duster produced

April 12th, 2014 1 comment

Renault Duster one million. Picture courtesy of autoplus.fr

Yesterday Renault and its Romanian subsidiary Dacia announced the one millionth Duster produced in its Curitiba, Brazil plant, only 4 years after its original launch. This announcement was made as pictures of a Duster rescuing a Porsche Macan in distress were doing the rounds on the net (see below). A serious communications ‘coup’ for Renault as it portrays the 15.100€ Duster as more offroad-capable than the 60.000€ Porsche…

Dacia Duster Porsche Macan. Picture courtesy Gavin Green via Twitter

The Duster was helped towards passing the one million unit-milestone by record 2013 worldwide sales of 376.000 units. Along with this announecemt, Renault detailed the market where the Duster has been the most successful so far: Russia (151.633 sales), France (145.612), Brazil (117.303), India (85.974) and Germany (70.159). Its recent facelift has boosted its sales even further in Europe: it is up 23% to rank #27 there so far in 2014 vs. #43 in 2013… The Duster is sold in over 100 countries and assembled in five factories worldwide: Pitesti in Romania, Curitiba in Brazil, Envigado in Colombia, Moscow in Russia and Chennai in India.

Last but not least, Renault says “the Duster is a pillar of the Renault Group’s worldwide growth in the world and has become most popular vehicle sold by Renault in the world”. Nothing less.

Categories: World

World March 2014: Audi (also) breaks single-month sales record

April 8th, 2014 1 comment

Audi R8 World March 2014. Picture courtesy of motortrend.comAudi, like Mercedes, is at record worldwide levels in March.

* See the Full article by clicking on the title! *

Only a couple of days after Mercedes announced it broke its monthly worldwide sales record, Audi announced it did exactly the same! March worldwide volume for the German premium carmakers is up a stunning 15% year-on-year to 170,450 registrations, obliterating its previous singe-month record of 150,300 units reached back in September 2013 by more than 20,000 units!

But wait there’s more: exactly as Mercedes did, Audi also posted all-time record worldwide First Quarter sales at 412,850 vehicles, up 12% year-on-year and the first time in the company’s history it sells over 400,000 units in the first 3 months of a year. As a reminder Mercedes sold 374,276 units in the same period (+15%). Audi said its year-on-year sales have risen for 51 consecutive months now. These are historical times indeed for premium German brands. BMW will announce March sales later this week, is a third record in the cards?

Not surprisingly, the new A3 sedan played a big role in Audi’s March record, with worldwide sales of the nameplate up 53% on March 2013 to 28,750 units including the hatchback sedan. Interestingly, the not so young Q7 SUV also did wonders at +39% while the A8 was up a whopping 49%.

Audi sales increased 7% year-on-year in Europe in March to 88,750 units, and if we look at figures country by country China is by far the brand’s strongest market with 47,636 sales (+37%) followed by the UK at 28,068 (+13%) and Germany at 27,226 (+10%). The US for its part is up 8% to 14,246 sales.

Previous post: World March 2014: Mercedes breaks single-month sales record

 

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Categories: World

World March 2014: Mercedes breaks single-month sales record

April 4th, 2014 3 comments

Mercedes GLA World March 2014The all-new GLA helped Mercedes break its monthly volume record this month.

* See the Full article by clicking on the title! *

According to Automotive News, Mercedes set a new worldwide monthly sales record in March, up 13% year-on-year to 158,523 registrations. First quarter sales also reached an all-time high 374,276 units, up 15% on 2013. Mercedes said this record was driven by high demand for the E-Class model and the fast growing compact range: the A Class, B Class and GLA Class which launched mid-March helped Mercedes lift sales in the compact segment by 27% last month. Mercedes gained ground in all its major markets in March, with the US up 11% to 27,401 deliveries, Germany up 1% to 25,544, China up 34% to 24,936 and the UK up 19% to 22,369 units. In Europe as a whole the brand progressed by 8% to 76,587 sales or 48% of its worldwide total.

Full article below.

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Categories: World