How China Brands Took Over the World’s Hottest SUV Marke

Bloomberg Business, April 17, 2015

BYD Co.'s Sport-Utility Vehicles

BYD Co. S6 sport-utility vehicles (SUV) move along the production line at the company's assembly plant in the Pingshan district of Shenzhen, China. Photographer: Brent Lewin/Bloomberg

After years of losing out to foreign brands, China’s automakers are winning in the world’s hottest SUV market by employing a tried-and-tested strategy: offering them cheap. 

By flooding the market with comparable models at lower prices, Chinese automakers accounted for eight of the 10 bestselling sport utility vehicles in the first quarter, crowding out global nameplates like Toyota Motor Corp.’s RAV4 and Honda Motor Co.’s CR-V. 

Chinese-branded SUV sales more than doubled in the first quarter to overtake foreign nameplates in the segment this year, accounting for 56 percent of all deliveries, according to data from the China Association of Automobile Manufacturers. At the Shanghai auto show next week, Honda will unveil a full-sized SUV concept that will compete for attention with local offerings like BYD Co.’s new Song and Yuan SUVs. 

“A significant number of Chinese consumers are looking for a more affordable alternative to premium-priced foreign SUVs,” said Bill Russo, a Shanghai-based managing director at consultant Gao Feng Advisory. “Foreign automakers now need to price more aggressively as the market matures and becomes more hyper-competitive.” 

Almost half of the new and refreshed passenger vehicles slated for debut this year in China are SUVs, with about three-quarters of them from local automakers, according to estimates by Bloomberg Intelligence.

Cheaper SUVs

Global automakers are competing against names little known outside China: Anhui Jianghuai Automobile Co.’s Ruifeng S3, BAIC Motor Corp.’s Huansu and Chongqing Changan Automobile Co.’s CS35 all rank in the top 10 by sales. Great Wall Motor Co.’s H6, the most popular SUV in China, costs about half the price of Volkswagen AG’s Tiguan. 

The average price of the bestselling Chinese SUVs in the first quarter was was 82,900 yuan ($13,380), versus 167,300 yuan for the foreign makes, according to dealership quotations compiled by Autohome, a car-pricing website. 

The addition of new models is being accompanied by a surge in production. Annual output of SUVs in China is estimated to reach more than 7.04 million units in 2018, up from 4.32 million last year, according to researcher IHS Automotive.

Rare Win

The SUV success represents a rare win for China’s automakers, which have struggled despite heavy government intervention. Foreign companies are required to set up joint ventures with local carmakers to operate in the country, sharing profits and technology. 

Utility vehicle sales accounted for 24 percent of the total passenger-vehicle market in the first quarter. Local carmakers have been fast to catch the shift in consumer preference from traditional sedans to more spacious crossovers, and fill the gap in the market for lower-priced alternatives. 

“It’s about time Chinese automakers gained back some territory after losing out to foreign brands for so many years,” said Cao He, a Beijing-based analyst at China Minzu Securities Co. “But they have to watch their backs and make sure the growth is sustainable and they don’t put all their eggs in one basket.”

Toyota Isn't in Tune With China's Needs: Russo

Bloomberg Television, January 22, 2015

Gao Feng's Managing Director Bill Russo discusses China's car market snd why the country is so important for automakers with Bloomberg's Rishat Salamat on "On The Move".

http://www.bloomberg.com/news/videos/2015-01-22/toyota-isn-t-in-tune-with-china-s-needs-russo

China’s carmakers have yet to make their marque

The Financial Times, February 3, 2014

By Tom Mitchell in Wuhan

• 
  Crowded lot: thousands of cars sit outside the Dongfeng-Peugeot Citroen plant in Wuhan awaiting shipment. High production from the joint venture contrasts with Dongfeng’s own plants
• Dongfeng’s Aeolus S30: the Chinese carmaker has four successful joint ventures, but it has struggled with its own branded vehicles. These account for less than 10 per cent of annual sales
  

  
  

Aside from a few Communist Youth League banners and a summary of the reforms unveiled at the Chinese Communist party’s third plenum last November, there is little to distinguish Dongfeng’s wholly-owned Aeolus car plant from its nearby joint venture with Peugeot Citroën and Honda.

Situated in a development zone in Wuhan, an industrial city in central China, the Aeolus factory has borrowed equipment and manufacturing systems from both Peugeot and Nissan, state-owned Dongfeng’s third joint venture partner.

Wheels in motion

Passenger car exports

The parking lots outside each plant, however, tell a different story. While thousands of cars are lined up outside Dongfeng’s Peugeot and Honda factories in Wuhan, awaiting shipment to distributors across the world’s largest car market, its Aeolus factory produces only about 300 vehicles a day, or about 100,000 units annually.

Dongfeng, one of China’s “Big Three” car groups alongside Shanghai Auto and First Auto Works, has more joint ventures with international car groups than any of its domestic peers. Including Korean partner Hyundai, it currently operates four joint ventures and signed a fifth partnership agreement in December with Renault. The Wuhan-based company is also poised to take a 14 per cent stake in Peugeot as part of €3bn capital raising.

Dongfeng’s four joint ventures account for more than 90 per cent of the group’s annual passenger car sales, dwarfing those of its own Aeolus brand. It is an imbalance shared by all of China’s state-owned car companies and helps explain why the country that boasts the world’s biggest car market has, unlike Japan and Korea before it, thus far failed to produce a national champion of its own that can compete globally.

“On the plus side, joint ventures spin off a tremendous amount of profit for the state-owned enterprises that they’re affiliated with,” says Bill Russo of Synergistics, an industry consultancy. “On the negative side, those profits are a drug that you become dependent on. Chinese car companies haven’t really been successful at investing them into their own branded vehicles.”

Last month, the China Association of Automobile Manufacturers announced that the country’s car sales grew more than 15 per cent last year to 18m units – almost triple the number sold in 2008. During this period, the market share of Chinese brands peaked at 31 per cent in 2010 and has since fallen to 27 per cent. Meanwhile, China’s 2013 car exports fell almost 10 per cent year on year to just 596,300 units – accounting for only 3.3 per cent of total production.

Imports, meanwhile, nearly tripled to 1.1m vehicles, driven by strong demand for luxury vehicles. While China exports more cars to Algeria than any other country – with its next biggest markets being Russia, Chile and Iran – the largest source of its own automotive imports is Germany.

“The quality of Chinese cars currently can’t compete with multinationals,” says Yao Jie, deputy secretary-general of the association. “We need to work harder to improve domestic brands.” According to CAAM, last year China’s 10 most popular models, led by the Ford Focus, were all manufactured by Sino-foreign joint ventures.

“Most Chinese state car companies know how to bolt a car together,” agrees Max Warburton, car analyst with Bernstein Research. “But replicating a foreign manufacturing system is not a particularly valuable skill set. Real skills lie in product development and in future technology.”

On a tour of Dongfeng’s Aeolus plant, employees are humble but also determined. “I feel that we can catch up but it will take a long time, perhaps 10 years,” says Huang Mingke, a line manager who gave up a job with Dongfeng’s Peugeot joint venture even though the Aeolus plant generally pays lower wages than the joint ventures. “We are investing a lot in critical components, such as engines and transmissions.”

“Although we have borrowed some advanced management techniques from Peugeot and Nissan, it’s only a foundation on which we are building,” adds Tao Haiying, a company official. “We can study and absorb their best practices as we create our own.”

Many analysts believe Dongfeng and its domestic peers will have to sort out their competitive issues at home before they can emerge as a threat overseas. “Maybe China can do something that no one else has, but I haven’t ever seen a car company become a successful exporter without having stable development in their home market first,” says Mr Russo. “You have to achieve a certain size and scale at home before you can compete away.”

The challenge for China’s car companies will be to achieve this in the world’s most competitive automotive industry. When Japanese and Korean carmakers broke out in the 1970s and 1980s, they did so from the shelter of protected home markets.

Dongfeng’s pending deal with Peugeot and Geely’s acquisition of Sweden’s Volvo in 2010 suggest another way forward. What Chinese car companies lack in experience and technical expertise, they can make up for in cash.

Last year Geely established a research centre in Sweden, while Peugeot offers Dongfeng a tempting short-cut in some key areas. “Peugeot has kept spending through the [global financial] crisis,” notes Mr Warburton at Bernstein Research. “So even though its finances are a mess it does have basic platforms, power trains and transmissions that are fully competitive. Dongfeng doesn’t have any of that.”

Additional reporting by Wan Li

Click here to read this article at FT.com

Peugeot agrees main terms of tie-up with China’s Dongfeng

The Financial Times, December 11, 2013

• 1810: The Peugeot family business begins to put down its engineering roots as brothers Jean-Pierre Peugeot II and Jean-Frédéric turn their father’s grain mill into a steel foundry, making everything from coffee grinders to umbrella frames
• 1882: The company turns to transport, making bicycles. The first was Armand Peugeot’s ‘Le Grand Bi’, or penny farthing bike
• 1893: The Peugeot Type 5, which was powered by a two-horsepower engine, was produced from 1893 to 1896
• 1913: The Peugeot 153, whose 2.6-litre, four-cylinder engine produced 12 horsepower, was made in various forms until 1925
• 1929: Peugeot unveils its first mass-produced car, the 201, but sales were are hit by the Depression
• 1934: The top-of-the-range Peugeot 601 rolled off production lines in 1934
• 1940: After the Peugeot 402, produced from 1935 to 1942, the company is forced to build cars and weapons for the German war effort
• 1962: The stylish Peugeot 404 cabriolet became a 1960s icon
• 2010: Peugeot starts production of the fully electric iOn city car
• Today: Robert Peugeot is chairman of FFP, an investment company through which the Peugeot family controls a 25 per cent stake in the car company ©Reuters

PSA Peugeot Citroën and China’s state-owned carmaker Dongfeng Motor have agreed the main terms of an industrial and commercial partnership that will include a large capital injection into the French group in return for technology sharing.

The two carmakers are still hammering out the details but the agreement is expected to involve a €3bn-€4bn capital raising by Peugeot and an agreement for the two groups jointly to develop and produce low-cost small cars for southeast Asian markets.

Peugeot hopes to be able to have the deal announced in the first quarter of next year, according to two people briefed on the discussions.

The French group is desperate to lower its over-dependence on the moribund European car market and is rapidly burning through its capital reserves. Both Peugeot and Dongfeng declined to comment.

Peugeot closed down the first large car factory in France for 30 years this year and reduced its workforce as it seeks to reduce the €3bn cash burn it suffered in the full year 2012. It recently hired a former Renault executive to lead a more globalised push.

The company already has a successful joint venture with Dongfeng building cars in China, but trails rivals such as Fiat and Volkswagen in markets such as South America, and Renault-Nissan in tapping growth in southeast Asian markets.

Carmakers have increasingly turned to alliances and joint ventures to increase their scale and cost efficiencies, but a deal between Peugeot and General Motors to share some products and suppliers has failed to live up to the French carmaker’s hopes.

There are expected to be 5.5m cars and light vehicles sold in southeast Asia this year, roughly half the size of western Europe. But the region’s market is expected to grow by more than half by the end of the decade, versus flat or marginal growth in Europe.

Negotiations are continuing between Dongfeng and Peugeot about exactly how much the Chinese group will pay for what percentage of Peugeot.

The people briefed on the discussions, who declined to be named as the talks were private, added that it could still all fall apart, although this was looking less and less likely.

The French state is contemplating matching any investment made by the Chinese group to maintain French influence over the company.

The most likely investment by Dongfeng and the French state would give the Chinese carmaker and Paris 17.6 per cent each, according to research by Macquarie, with the Peugeot family holding 16.5 per cent and GM 4.5 per cent.

An injection of that size would result in the Peugeot family losing control of the business it founded in 1882.

Based in Wuhan, in central China, Dongfeng is one of China’s largest car manufacturers with annual revenues of $63bn. It already operates a manufacturing joint venture with Peugeot alongside three others – Honda, Kia and Nissan – and last week signed a fifth joint venture agreement with Peugeot’s French rival Renault.

If completed and approved by Beijing, Dongfeng’s tie-up with Peugeot could catapult it on to the global stage – something that no Chinese state-owned carmaker has yet been able to achieve. Hangzhou-based Geely, which purchased Volvo Cars from Ford in 2010, is privately owned.

“Whatever they pay for the shareholding, they’re probably going to get justification in knowhow,” said Bill Russo, a Beijing-based automotive consultant. “Peugeot’s global distribution capacity would also be an advantage for Dongfeng.”

Peugeot accounts for 60 per cent of France’s car production and employs close to 100,000 people locally.

Additional reporting by Tom Mitchell in Beijing

豪华车品牌开辟巴西战场 寻找新增长点_网易财经

China Business News, November 28, 2013

在巴西，汽车销售份额占首位的是意大利品牌菲亚特，为22.8%，其次是德国大众和美国通用，分别占21%和19.8%。

不过这个局面或即将被豪华车品牌打破。捷豹路虎、宝马、奥迪等豪华品牌正在布局巴西市场，试图在新兴市场中寻找新的增长点。

据路透社报道，巴西地方政府透露，捷豹路虎将斥资10亿巴西雷亚尔（约合4.37亿美元）在里约热内卢州建造一座新工厂，捷豹路虎新工厂选址位于伊塔蒂亚亚，预计最早将于2015年投入运营，该公司将于12月3日就这一计划发布官方声明。

在巴西投资设厂将成为捷豹路虎在海外市场中第二个生产基地，第一个海外生产基地则通过和奇瑞汽车合资的形式，设立在中国。

巴西汽车经销商协会Fenabrave提供的数据显示，今年前10个月中，路虎在巴西市场累计销售了8920辆汽车，宝马与奔驰在这一市场的同期销量则分别达到了1.15万辆与1.05万辆。

捷豹路虎在巴西市场设厂不是一家豪华车品牌的个案。近两年来，多家豪华车企已经敲定或考虑在巴西投产，或将产品引入巴西市场。

去年10月份，宝马宣布投资2.0亿欧元（约合2.61亿美元）在巴西建立一座整车厂，以加快在巴西市场的销售增长速率，新工厂将位于圣卡塔琳娜州，2014年投产，设计年产能3万辆。

奥迪紧随其后。今年9月份，大众汽车宣布一项投资计划，计划在巴西投资12亿雷亚尔（约合5.29亿美元），开始在当地组装最新款高尔夫车型并重启奥迪豪华车在巴西的生产。大众汽车发言人表示，奥迪预计从2015年开始在巴西启动生产，并在3年内使A3紧凑车的年产量达到2.6万辆，还将在巴西Ingolstadt工厂生产Q3紧凑型SUV。

梅赛德斯-奔驰也对外宣布了对巴西市场投资的计划。对于豪华品牌车企纷纷对巴西市场投资的现象，克莱斯勒东北亚前副总裁、香港协同共进有限公司总裁罗威对《第一财经日报》记者表示：“最根本的原因是巴西有可能是未来10多年中增速最快的市场之一。为了不在未来的竞争中落后，豪华品牌车企投资巴西是很正常的一个策略。”

公开的数据显示，巴西已经超过德国成为世界第四大汽车市场。在过去的十年中，国内登记的轿车数量增加了将近一倍。“巴西乘用车市场近年来稳步增长，过去5年年均增长率达到7%，其中中高级轿车的增长速度更快，因此越来越多汽车厂商考虑增加在巴西的投入。”普华永道中国管理咨询业务合伙人金军对本报记者表示。

根据盖世汽车网统计，今年前三季度，巴西轻型车的新车累计销量为263.84万辆，去年同期则为266.68万辆，今年同比下跌1.1%；整体车市累计销量278.03万辆，去年同期为278.90万辆，今年同比下跌0.3%。

“巴西的政局、经济发展稳定，是仅次于中国汽车市场体量的新兴市场。这几年，巴西市场每年的新车销量大概在360万~400万辆之间徘徊，销量比较稳定。”江淮汽车高层对本报记者表示。江淮汽车今年已经宣布通过和巴西当地企业合资的形式在巴西设厂。

罗威表示，巴西进口税也使得车企在巴西投资以及本地化有了更大吸引力。2011年年底，巴西政府出台新税政：进口汽车或没有按巴西政府要求完成国产化率指标的汽车生产企业，将被提高30%的税率，同时对在巴西增加投资的汽车商提供税收减免政策。

不过，本田汽车和通用汽车公司已表示巴西豪华车销量仍然不令人乐观，因此他们不会考虑使巴西成为生产高端市场车型的基地。

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Japanese carmakers rue lost lead in China

The Financial Times, November 21, 2013

Troubled times at Toyota: sales fell precipitously last year in China
in the wake of a high-profile diplomatic dispute and strikes at car plants over pay

By Tom Mitchell in Guangzhou and Jennifer Thompson in Tokyo

Toyota and Honda picked a bad time to take their foot off the accelerator in China.

As the global car market went into a financial crisis-induced tailspin in 2008, Chinese demand kept expanding, accounting for one-third of the industry’s total growth over the ensuing five years.

Last year, annual sales of passenger cars and minivans remained 9 and 14 per cent below their pre-crisis peaks in the US and western Europe respectively, and recovered to 2007 levels in Japan, according to automotive consultancy AlixPartners. Meanwhile, sales in China’s market more than doubled to 18.6m, making it the world’s largest.

“The downturn didn’t really happen in China,” says Bill Russo, a former US auto executive and Beijing-based industry consultant. “China’s share of the global market rose significantly in 2009 and 2010.”

Toyota and Honda missed the party. Together with Nissan, the “big three” Japanese auto companies’ combined share of the China market crashed from more than one-quarter in 2008 to just 15 per cent in the first half.

Toyota and Honda at least have some interesting excuses. Japanese car companies make for easy targets in China, especially at times of political tension between Asia’s two largest economies.

Chinese nationalist passions boiled over in September last year, after the Japanese government purchased the disputed Senkaku Islands – known in China as the Diaoyu – from their private owner. Japanese car companies briefly halted production as angry crowds targeted their cars and dealerships.

Some Chinese drivers cleverly presented the mob with a moral dilemma – and saved their Japanese cars – by plastering the vehicles with stickers of Chinese flags and other patriotic symbols.

“We lost 50 per cent in sales immediately,” Carlos Ghosn, chief executive of Nissan, said as he delivered first-half results earlier this month. The carmaker is yet to regain the 7.7 per cent market share it enjoyed before the dispute.

Toyota’s vehicle sales also dropped rapidly, with many customers cancelling orders and shunning showrooms. It was forced to reduce production temporarily in some plants by as much as 60 per cent.

Japanese auto executives admit that the severity of the incident took them by surprise, given that previous geopolitical flare-ups had not seriously affected production. “Japanese carmakers always feel that [when it comes to] doing business in China we don’t stand on the same point as western carmakers,” says one industry insider. “We always have to overcome these past political problems.”

Ivo Naumann, AlixPartners’ Shanghai-based managing director, says: “The biggest problem [with these incidents] is on the dealer side. If sales decline or your windows get smashed every three or four years because of some stupid political issue, you ask whether you should continue.”

A series of industrial actions in 2010 that marked the beginning of the end of China’s cheap labour advantage also primarily affected Japanese car plants in southern China. The striking auto workers drew on lingering resentment over their country’s former wartime adversary.

Many analysts, however, do not accept that geopolitics has been the main reason for Toyota and Honda’s poor performance in China over recent years. They point instead to inadequate plant expansions, low levels of localisation and other strategic errors that were made before Sino-Japanese relations hit their latest nadir.

After last year’s turmoil, Toyota’s sales this September rose 45 per cent year on year, according to market research consultancy LMC Automotive, which collates data for every player in the market, while Honda and Nissan’s China business doubled.

But all three companies’ sales over the first three quarters of 2013 remained largely flat or slightly down versus the same period last year, even as the overall market grew a robust 15 per cent.

“The Japanese took a negative view of the market,” says Mr Naumann. “They simply ran out of capacity. There was demand but they just couldn’t supply it.” Toyota in particular, he adds, badly underestimated how fast the market would grow.

Toyota enjoyed a bumper 2008 in China, attaining a 10 per cent market share and becoming the country’s second-best-selling brand after Volkswagen.

But as the global financial crisis took hold, it froze development of a major plant in Changchun, a northeastern industrial centre, and delayed approval for capacity increases at other facilities. The Changchun plant, originally slated to have begun manufacturing in 2010, finally opened last year with an annual capacity of 100,000 vehicles. “We never thought of [China] as an El Dorado,” one Toyota executive admits.

GM is now firmly entrenched in the number two slot.

Some analysts are optimistic that Toyota and Honda have learnt from their mistakes and can bounce back, although it will be a difficult task in what is now the most competitive national market in the history of the auto industry. More than 100 manufacturers are active in China including every major multinational car company.

“They will regain market share,” says Mr Naumann. “They are still formidable companies. They still have excellent cars.”

Tatsuo Yoshida, auto analyst at Barclays, also believes Japanese manufacturers are at last addressing their deficiencies in China after concerns about intellectual property protection had for years dissuaded them from developing more vehicles there. But he expects that the US will remain their key market.

Additional reporting by Henry Foy in London

Click here to read this article at FT.com

Bouncing Ideas on East Lake: The Future of Automobile - Global Intelligence under Multiple Challenges

November 1, 2013

Official summary of the Global Automotive Forum 2013 held in Wuhan, China
Click here to read the original notes posted at www.ga-forum.org

On the afternoon of October 18, 2013 (The Fourth) Global Automobile Forum was successfully closed on the International Conference Center of East Lake, Wuhan, after a busy two-day agenda.

In this Global Automobile Forum, a wonderful dialogue and discussion were developed closely around the theme of "future development road of automobile - objectives • strategy • mode".

This year, China's automobile industry has seen 60 years of development, and China's auto production and sales are expected to exceed 20 million, continuously ranking the as the largest auto market in the world. It will provide a unique strategic opportunity for China's auto industry.

However, the global auto industry encounters many challenges, such as the environment, fuel consumption, energy, safety and traffic management, etc. Consequently, the issue of whether a feasible and innovative solution can be proposed and put into place has become a key factor related to the development of auto industry and the survival of auto enterprises. Therefore, the cooperation among policy makers, significant industry organizations, auto manufacturers, suppliers, vendors and all related parties is becoming more and more important.

As the world's largest automobile market in terms of production and sales, the future development of the Chinese auto industry has attracted the attention of international auto industry. Wang Ruixiang, the president of China Machinery Industry Federation, also expressed in his speech that the realization of dream of strong auto country was depending on the abundant resources and global automotive industry, as well as the sincere cooperation among international auto enterprises.

At the opening ceremony, Wang Xia, the executive chairman of Organizing Committee of Global Automobile Forum and the president of China Council for the Promotion of International Trade Auto Industry Branch said in his speech: "As the world's most populous country with the largest demand for new cars and fastest growing auto industry, the great challenges and deep-seated problems faced by China as its auto industry becomes the  development engine of global auto industry should also attract the global attention, because the solving of these issues involves not only the development of China's auto industry but also the development of global auto industry."

The development of the auto industry is based on the wisdom of China and world. This is also the original intention that brought auto industry elites from the whole world to this forum in Wuhan.

Chi Shiyan, the president of Honda Motor Co., Ltd., also held high expectations for the development of China's auto industry. He believed that in the face of challenges from energy and environmental concerns, it was important that China should lead the direction of the global auto industry. While such a right direction and pace could better benefit the world, and what was important was not just the increase of sales but the quality, safety and environmental protection issues, so as to better achieve a greater global competitiveness and support the global market whilst being more accepting of Chinese automotive products.

But in fact, there are many problems to be solved if China intends to lead the development direction of global automobile industry. Wang Ruixiang, the president of China Machinery Industry Federation, noted that compared to developed countries in the world, China stills lagged behind in the independent innovation, core components and brand building; "To build a truly strong auto country, we still have a long way to go." Wang Rui xiang said.

Bill Russo, (formerly) from Booz & Company and (presently) the founder and president of Synergistics Company also pointed out that now China's auto market was still very fragmented and the self-owned brand competition was fierce. Therefore, China's auto industry was in a divide-and-rule pattern, without any cohesion, and the local competition in the internal market was very intense. The level of competition needed to be improved.

Then, as the world's largest auto market and producing country, can China lead the development direction of global auto industry in the future?

Zhu Fushou, the general manager of Dongfeng Automobile Co., Ltd. also proposed that: facing the strategic opportunities, China must solve three contradictions to achieve the sustainable and healthy development of auto industry, i.e. the contradiction of competition and long-term confrontation between joint-venture brand and self-owned brands in the China's market; the contradiction between firm determination of China's enterprises entering international market and international trade barriers; the contradiction between rigid demand for auto and energy, transportation and environmental protection.

Zeng Qinghong, the general manager of GAC Group advised that: firstly, to accelerate the promotion of independent innovation capability, especially the breakthrough of key parts and core technologies; secondly, to speed up the integration and restructuring; thirdly, to quicken the economic restructuring, especially the industrial layout adjustment. And the four leaps include: the transformation & upgrading from manufacturing to creation, the leap from production base to industrial base, the leap from asset management to capital management, and the leap from business products to brands.

Wang Xigao, the chairman of JMC Group, held that to improve the independent R&D capabilities of China's self-owned brand automobile enterprises, it should gradually realize the maturity of technology research and development, and finally achieve the purpose of independent innovation by absorption, imitation and improvement when introducing the foreign advanced production technology. In this step, the improvement was the key. Anyone can not blindly imitate the foreign technology, but find a suitable road meeting the actual needs of China's market and international market during the learning process.

Guo Qian, Chairman and CEO of Qoros expressed that the automobile development of China has gone through several stages: firstly, the grasp of some key technologies or a car body or a gearbox; secondly, the grasp of system integration; thirdly, product platformization and modularization and fourthly, the establishment of brand features. In this respect, Qoros has created a kind of automobile with high starting point, which has become a new model of Qoros.

As the representative of commercial vehicle enterprises, Yuan Hongming, Deputy Party Secretary and General Manager of Shaanxi Automobile Group Co., Ltd. thought that autonomous vehicle enterprises should make breakthrough by focusing on post-market, accelerate the promotion of new energy and intelligent technology, pay attention to the mutual development of automobile and parts. Chinese enterprises should also unite closely to reduce internal consumption.

Alan Mulally, President and CEO of Ford Motor Company gave a sustainable technology roadmap: improvement of traditional internal combustion engines and materials, including diesel and gasoline, improvement of aerodynamics and electronic equipment, etc., integration of system and interconnectivity of technologies; automobiles will become a mobile equipment in the future to be connected to internet by people; development from hybrid power to full electric vehicle." Cooperation is required during the whole process. Governments and enterprises in the global world should work together so as to bring the proven technologies to consumers", Alan Mulally said.

Prof · Dr · Jochem Heizmann, President and CEO of Volkswagen (China) thought that the future development of auto industry relies on three key factors: production with energy conservation, high-efficiency mobility and intelligent system. He believed that to achieve these goals, the auto industry of China should be cooperative, including cooperation with suppliers, have a clear and stable legal framework and environment and establish a stable relation with core participants and large number of partners. At the same time, a strong team-work spirit should be built among employees.

In terms of the international cooperation of Chinese automobile enterprises, Geely has come to the forefront by acquiring Volvo and some other international companies. Li Shufu, Chairman of Volvo Car Corporation, founder and chairman of Geely Holding Group expressed that the localization projects of Geely-Volvo in Chengdu and Daqing have been approved this August. This is also an event with far-reaching significance in the development of Chinese auto industry. Currently, Geely has determined to build China to the second home market of Volvo to promote the revival process of Volvo in the global world.

In the two-day meeting, 2013 (Fourth) Global Automobile Forum arranged 16 open sections and launched a range of wonderful discussions on issues of strategic opportunities, multination development, future automobile, post-market, financial innovation, new energy strategy, automobile consumption and international talents, etc.

As what is hoped by Wang Xia, the Executive Chairman of the organizing committee of Global Automobile Forum, the automobile dream of China is an important part of world automobile dream. The mutual dream of global automobile people is: to make the society better with automobiles. This forum which integrated global wisdoms to offer advices and suggestions to the development of auto industry is to guide another new development of auto industry with the creative, constructive and proactive thoughts of everyone.

This session of forum is hosted by Auto industry Committee of China Council for the Promotion of International Trade and Wuhan People's Government, cosponsored by CCTV and firstly held in "City with Auto industry Dream and Solid Foundations"--Wuhan. It attracted more than 900 professionals from 20 countries of the world, including over 200 foreign guests or overseas personnel. The nature of the "Global" Forum is further intensified.

This forum totally organized 16 open sections, 1 closed-door meeting, 6 press conferences, 2 off-field activities and 1 concert held in the same period. 82 authoritative speakers participated in the sectional discussion. USA Michigan and Georgia States specially sent governments and business delegation to participate in the forum.

This forum surpasses the previous three Global Automobile Forums in the scale of meeting, coverage of participants, degree of internationalization and diversity of forum activities, especially in the height, depth and range of issues under discussion, and reaches a new realm and new height in global professional meetings. What is particularly worth mentioning is that this forum broke through the scope of multilateral exchanges, increased bilateral exchange activities, held a number of talks between enterprises, press conferences and communications between enterprises and medias, meetings between government leaders and corporate executives and so on, which makes the platform role of Global Forum more prominent.

Lost Year for Toyota Dealer in China Underscores Japan Challenge

Bloomberg Business Week, September 11, 2013

The Toyota Motor Corp. logo is displayed on a vehicle in Beijing, China.

It took Wang Chongwei almost a year to rebuild his Toyota Motor Corp. (7203) dealership in Qingdao, China, after a mob protesting against Japan’s purchase of a group of disputed islands burnt down the showroom.

On opening day one humid Sunday morning last month, more than 100 local residents, some with toddlers in tow, showed up to play funfair games and watch svelte dancers performing South Korean pop star Psy’s new hit single “Gentleman.” That’s a stark contrast to the demonstrators last year, who also torched Wang’s other dealership by Honda Motor Co. (7267)

“I’m a patriot just like any other Chinese, but politics should be politics and business should be business,” Wang said in an interview at the showroom’s reopening. “Last year’s incident is unique and I don’t want to talk about it any more. I am fully confident in future sales.”

Wang said he’s targeting to sell the same number of cars at the reopened dealership -- about 100 cars a month -- illustrating how Japanese automakers are working to return to last year’s sales levels even as the likes of Ford Motor Co. and Hyundai Motor Co. pull ahead.

Intermittent bouts of tensions between Asia’s two largest economies also underscore the risks of a prolonged consumer backlash against Japanese auto brands, which have lost a fifth of their market share in the past year. Winning back the lost ground will involve increasing incentives that will pressure margins, according to consultancy Synergistics Ltd.

“Even if the Japanese recover, they will do so at great expense,” said Bill Russo, Beijing-based president of Synergistics. “That’s really going to affect their investment in this market going forward. They have to think where else in the world they can have profitable growth if they can’t get it in China.”

Disputed Islands

Nationwide protests erupted across China last September after Japan moved to purchase a group of disputed islands -- known as Senkaku in Japan and Diaoyu in China -- from their private owner one year ago yesterday.

Thousands of Japanese cars were vandalized and businesses attacked by mobs in the demonstrations. The ensuing consumer backlash sent Toyota and Honda to their first annual sales declines on record in the world’s largest vehicle market.

The dispute hasn’t blown over. Japan lodged a diplomatic protest to China after eight Chinese Coast Guard ships entered Japan-controlled waters on Sept. 10 near the island chain being claimed by both nations.

Sales Slump

According to Nissan Motor Co. (7201), the biggest Japanese carmaker in China by volume, its sales are down more than 6 percent in the country during the first eight months of this year, even as industrywide passenger-vehicle sales increased.

Toyota’s deliveries have declined 5.3 percent in the same period, while Honda slid 2.9 percent.

“In China, there are several issues, ranging from the political situation between the two countries, the slowdown of the Chinese economy and the products we sell in the market,” Toyota Executive Vice President Nobuyori Kodaira said Aug. 21. “Our aim is to carefully respond to what our Chinese customers want and to raise our efforts in meeting those needs.”

Toyota passed on Shanghai and Beijing and chose Dubai for one of its three new global Intersect by Lexus boutique stores, a key effort by the automaker to promote its upscale brand outside its biggest market of the U.S.

Asked whether the anti-Japanese sentiment played a part in that decision, Mark Templin, the brand’s vice president, said last month in an interview that the company wanted to be careful about the pace of expansion in China.

Slow Recovery

Honda said the political issue won’t affect its long-term plans in China and the automaker expects sales this year to surpass last year, according to Beijing-based spokeswoman Natsuno Asanuma. Nissan’s sales in China haven’t fully recovered, though it’s on track to achieve its plan this year, said Yoshiko Tsumagari, a spokeswoman for the Yokohama, Japan-based company.

Ford Motor Co., unencumbered by geopolitical baggage, has emerged as the biggest winner, benefiting from consumers seeking non-Japanese options and an expanded lineup of new models.

Deliveries at the Dearborn, Michigan-based automaker have jumped 50 percent in the first eight months of this year, driven by sales of its Focus compact and Kuga and EcoSport SUVs. The second-largest U.S. automaker last month introduced a revamped Mondeo mid-sized sedan aimed at Toyota’s Camry, Nissan’s Teana and Honda’s Accord.

Ford Benefits

“Ford’s success is due to their new product launches which suit the market well, but also because of the fall of the Japanese,” said Zhu Bin, an analyst with LMC Automotive in Shanghai. “They have many models that directly compete with the stronghold of the Japanese, such as the Mondeo sedan, Focus compact and Kuga SUV.”

General Motors Co. (GM:US) and Volkswagen AG (VOW) are also stepping up investments in China as both automakers forecast their sales will climb to 3 million vehicles in the country this year.

GM will invest $11 billion in China by 2016 and add four plants by 2015 that will boost capacity to about 5 million units. VW said in March that it will add seven car plants in the country, bringing the total to 19, and increase production capacity there to 4 million vehicles a year by 2018 from about 2.5 million currently.

Despite the headwinds, China remains too big a market to ignore and Japanese automakers should play to their strengths in fuel economy to win back customers, said Satoru Takada, an auto analyst at Toward the Infinite World Inc. in Tokyo.

Fuel Economy

That would mean wooing consumers like real-estate agent Lei Zhucheng, 43, who says tensions between the two countries aren’t a factor in his purchase decision.

“I look at the car’s quality rather than politics,” said Lei, who was checking out the Honda Jade wagon at the Chengdu auto show last month. “Honda cars are fuel-efficient. Their prices are reasonable and it’s good value.”

Back in Qingdao, Diao Zihui, marketing manager of the rebuilt Toyota dealership, said she wants to put the past behind her. The staff worked out of makeshift premises for months while the showroom was being rebuilt.

“It’s like a nightmare I hate to recall,” said Diao. “I shed a lot of tears. I hope this won’t repeat and China and Japan can be friendly.”

To contact the reporter on this story: Ma Jie in Tokyo at jma124@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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Bill Russo to Discuss Outlook for Chinese Auto Market and Luxury Brands at Investor Conference Call

Investor Conference Call, August 21, 2013

Wednesday, August 21, 2013, 10:00 AM EDT

Expert:  
William Russo
Founder and President, Synergistics Ltd.

Wed, 8/21 at 10 a.m. EDT 
REGISTER 
Replay available upon request.

EXPERT INSIGHTS ON:

• Five year growth outlook for China’s premium car segment
• Big three German OEMs vs. smaller players
• Demand drivers and adoption rates for SUVs and sports sedans
• Premium car buyer spending patterns, customer loyalty and opportunities for new brands
• Market segmentation from eastern to western provinces and from large to small tier cities
• Companies: Ford (F), General Motors (GM), Volkswagen (VOW), Toyota (TM),Honda (HMC), Chrysler, Nissan (NSANY), Hyundai (HYMTF), Daimler AG(DDAIF), BMW AG (BMW)

The Chinese auto market has passed a key inflection point, downshifting to a more sustainable growth pattern in-line with GDP. Competition is intense among the foreign and domestic vehicle OEMs as they adjust to the slower environment and attempt to stay profitable. While structural challenges will likely result in negative pricing and margin pressures, certain segments will continue to drive profitability, including luxury cars and SUVs. It remains to be seen if automakers and their partners can understand and anticipate these developments and implement strategies to diversify revenue streams.

ABOUT OUR EXPERT:

Bill Russo is President of Synergistics, Ltd, a consulting firm to the auto market and he has more than 25 years of experience in the industry. Prior to Synergistics he was VP of Chrysler Northeast Asia, where he successfully negotiated and secured government approval for six vehicle programs with three different Asian partners. In this time period, he launched a regional holding company as well as two distribution companies and oversaw the industrialization of the first Chrysler and Dodge-branded vehicles in Asia. He holds a U.S. patent for his innovative efforts towards reducing automotive new product development cycle time and is a published author and opinion leader whose viewpoints have appeared throughout several media outlets.

OUR ANALYST:  
Michael Cohen         Director, Consumer Research 

第一财经周刊-讴歌绕不开国产

China Business News, July 29, 2013

进入中国市场7年，本田公司旗下的高端品牌讴歌（Acura）始终没能打开局面。2012年在华总销量仅为2300辆，不及同为日系高端品牌的雷克萨斯6.4万辆的一个零头，与已经国产化的德系三大豪华车品牌比更是相距甚远。销量低迷使得不少经销商选择退网，其特约店数从2011年底的39家减少到目前的33家，比晚进入一年的英菲尼迪还少了一半。　

面对勉力支撑的经销商和日趋冷淡的消费者，讴歌需要一个好消息来让他们兴奋起来。

与广汽签订完关于2016年在广汽本田生产讴歌车型基本协议后的第二天，本田中国总经理仓石诚司就迫不及待地将这个好消息带给了经销商。在7月18日举行的讴歌半年度经销商大会上，他宣布将在3年内国产 Concept SUV-X。

这款概念车曾在今年4月的上海车展上作为全球首发亮相，但围绕具体在广本的哪处工厂投产以及计划的生产能力，双方都没有披露更详细的信息。广汽本田公关部对《第一财经周刊》表示，协议还处于母公司商讨阶段，有关生产及是否沿用目前的销售渠道等细节信息尚不明确。

至于目前讴歌中国事业部的职能是否会伴随国产化进行相应调整，本田中国新闻发言人朱林杰强调不是“全部进行调整”，但具体调整哪些职能现在还无法对外公布。这关系到广本是否只是扮演代工工厂的角色，还是将效仿一汽-大众奥迪事业部模式那样承担销售管理的职能，以及将来的利润分成问题。

一家已经退网的讴歌经销商内部人士认为“讴歌定价太高，不符合实际”。他说，在开业之初的2008年4S店还是盈利的，年销量在300至400台之间。但当年面向大排量汽车的消费税出台之后，讴歌大幅上调了官方指导价，而宝马、奔驰等其他品牌当时并没有涨价。以MDX为例，指导价从67万元涨至了80万元，但消费者的心理价位还停留在之前优惠完大约60万元的价格，可经销商的成本已经到了72万，在低价拿到的库存车被消化完之后，车一下子就变得非常难卖。直到退网前，年销量只有30至50台，停业前几个月，店里已经干脆不再向厂家提车。因为如果只按客户订单每月提1到2台，返利少提车价就相应变得很高，但如果按照厂家的目标来提车，就会形成库存积压。他透露投资商计划在原址重新开一家雷克萨斯店。

　　

所以，先把过高的价格降下来是讴歌决定国产最为直接的原因。其目前在售的六款车型中，有五款是3.0L以上的大排量车型，仅关税就接近40%。以中国消费者接受度最高的MDX系列为例，官方指导价超过80万元，即便按现在市场优惠20万元来计算，也比北美4.2万美元（约合26万人民币）的售价贵了1倍多。

　　

前克莱斯勒东北亚区副总裁、现任博斯咨询公司高级专家的Bill Russo在接受《第一财经周刊》采访时说，在国产化问题上，日系品牌已经落后了十余年，但它们现在不得不这么做，否则就将一直面对更高的成本。出于同样的考虑，英菲尼迪在去年宣布了在湖北襄阳的东风日产工厂投产的计划，两款国产车型明年就将上市销售。

　　

但与日产不同的是，本田在华有广汽和东风两个合资伙伴。而且，两家都有与讴歌同平台的车型在生产。广汽在赢得讴歌的同时，也在争取雷克萨斯的国产。雷克萨斯的ES系列与广汽丰田的凯美瑞出自同一平台，广汽高层曾在包括经销商大会等场合多次向丰田方喊话，但同样面对一汽和广汽两个合作伙伴的丰田对国产化的态度一直不甚明朗。

　　

英菲尼迪和讴歌相继决定国产，以及讴歌落户广汽，或许都将影响丰田的决定。

　　

讴歌没有选择将现有车型直接国产，而是重新开发一款紧凑型SUV，除了降低价格的需要，也是为了迎合中国市场的消费需求。2012年国内SUV销量同比增长超过20%，是增速最快的车型，其中2.0升及以下的紧凑型SUV占比更是接近七成。

　　

但问题是，即便国产了，也不一定能让讴歌彻底摆脱在中国市场所遭遇的窘境。

　　

在豪华紧凑型SUV这个细分市场，奥迪Q3、宝马X1已经相继国产，并且将价格下拉到30万以内。讴歌要在市场上占据一席之地，产品表现和定价都面临着不小的考验。

　　

要提升销量为国产化做铺垫，讴歌还必须转变之前将“有留学背景的海归派”作为主要目标消费群体的思路，这样的用户定位显然过于狭窄。华南区一家讴歌店的市场经理告诉《第一财经周刊》，他们的客户很多是当地类似五金商会等行业协会会员的企业主，并不是“海归派”。

　　

品牌号召力偏弱是讴歌自身已经意识到并在着手解决的问题。在今年半年的经销商大会上，讴歌表示将会在下半年增加广告宣传费用，给经销商的市场费？用也会增加。

　　

“比起英菲尼迪和雷克萨斯，讴歌的产品线更短，所以销量和份额的增长都会相当有限。”Bill Russo说。这也是为什么讴歌比雷克萨斯早三年进入美国市场，销量却落后于后者的原因。2012年其在美销量占全球销量的近九成，为15.6万台，但距离最高峰时2005年的21万台已经减少了1/4；而雷克萨斯则在2000年到2010年连续11年保持了美国豪华车销量的冠军，2012年共销售24.4万台车。

　　

国产化的讴歌是否会吸取美国市场的经验教训，也将决定其2016年之后的市场表现。

　　

更重要的是在这之前的三年如何维系现有经销商的忠诚度。Bill Russo认为，讴歌应该向经销商提供更具竞争力的价格以及更丰厚的激励机制。这可能会限制讴歌自身的利润空间，但也许是唯一的办法。与此同时，为了支撑未来国产化之后的销售，讴歌可以考虑引入更多本田的经销商。

　　

去年9月，本田社长伊东孝绅曾公布到2016年实现全球销量600万台的目标，虽然并没有明确其中讴歌所占的比例，但他表示计划投入10亿美元在2015年前对旗下所有车型全部进行一次更新换代。其中，作为主力车型的新款MDX将在下半年进入中国市场，“目前还不知道具体价格，不过看外形和性能参数，我们觉得蛮有信心的”，一位经销商人士说。

　　

联系编辑：gaoyulei@yicai.com

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