Toyota Poised to Lose Global Sales Lead to VW on China

Bloomberg News, January 22, 2015

Toyota Motor Corp., which fended off Volkswagen AG to remain the world’s top automaker in 2014, may lose the sales crown as early as this year as it falls behind in China, the world’s biggest auto market. 

Toyota is predicting its global deliveries will decline 1 percent in 2015 to 10.15 million vehicles, or just 10,000 units more than what Volkswagen sold worldwide last year. A new factory the German company is opening this year in Changsha, China, will add capacity for another 300,000 vehicles annually. 

As Volkswagen and General Motors Co. add factories to bolster their already-dominant position in China, Toyota President Akio Toyoda’s strategy of foregoing new car plants until at least next year could result in the first shakeup in auto-sales leadership since 2011. Toyota ranks sixth among global automakers in China and sells less than one-third as many vehicles as its two main competitors in China. 

“The difference is that Volkswagen has a jet engine strapped to its back called ’China’,” said Bill Russo, Shanghai-based managing director at Gao Feng Advisory Co. “Toyota, unfortunately, is in a position of weakness when it comes to the China market. It would be almost impossible to hold on to a number one position without being in the lead in China, and Toyota’s not even in that league.” 

Worldwide sales for Toyota, including at its Hino Motors Ltd. and Daihatsu Motor Co. units, climbed 3 percent to 10.23 million vehicles in 2014, according to a company statement. Volkswagen last week reported a 4.2 percent gain to 10.14 million vehicles, that included its two heavy-truck units. GM followed with sales of 9.92 million units, up 2.1 percent. Volkswagen and GM haven’t announced projections for this year. 

China Capacity 

Toyota, which hasn’t built an assembly plant in China since 2012 and faces a self-imposed moratorium on new factories until next year, will fall behind even further as Volkswagen and GM step up their expansion plans. 

GM has announced plans to add five new plants in China by 2018 even though President Dan Ammann said the market is “maturing rapidly.” 

Volkswagen expects to raise its China plant capacity to more than 4 million vehicles by 2018 from 3.1 million at end 2013, according to the company. Mainland China and Hong Kong accounted for a record 3.67 million deliveries at Volkswagen group last year, up 12.4 percent and extending the country’s lead as the German manufacturer’s largest single market. 

Sales Target 

By comparison, Toyota missed its sales projection for 1.1 million units in China in 2014, even as the Corolla and the Levin compact cars helped boost sales 13 percent to 1.03 million units. The company kept its China sales target unchanged for this year. 

Even though Toyota may cede the sales leadership, it still outearns Volkswagen. Analysts estimate Toyota earned a profit of 1.96 trillion yen ($16.7 billion) last calendar year, compared with 10.7 billion euros ($12.4 billion) at Volkswagen. 

“Their focus is not No. 1,” said Peggy Furusaka, a Tokyo-based auto-credit analyst at Moody’s Investors Service. “Toyota is more concerned about keeping profitability than chasing numbers. So for coming years, I wouldn’t be surprised to see Toyota selling fewer cars than Volkswagen.” 

Toyota’s also-ran status in China is compounded by threats by its dealers to drop out of its network, citing poor sales and a lack of profit. 

Dealer Threats 

As many as 10 percent of dealers for one of Toyota’s China ventures could abandon the brand, according to the China Automobile Dealers Association. Among the 523 distributors in the FAW-Toyota Motor Sales Co. group, 95 percent are losing money, with some dealers stopping sales or shutting down altogether because of the losses, the state-backed dealer’s group said. 

Vehicle sales growth slowed last year in China in tandem with the nation’s weakest economic growth since 1990. Deliveries are forecast to gain 8 percent to about 21.3 million passenger vehicles this year, according to the state-backed China Association of Automobile Manufacturers. 

“As long as China is growing rapidly, Toyota will need to build new factories there,” said Yoshiaki Kawano, an analyst with IHS Automotive in Tokyo. “They are probably reserving some energy for growth in the longer term, as they are trying to improve the efficiency at their existing plants.” 

To contact Bloomberg News staff for this story: Alexandra Ho in Shanghai at aho113@bloomberg.net; Ma Jie in Tokyo at jma124@bloomberg.net; Masatsugu Horie in Osaka at mhorie3@bloomberg.net

To contact the editors responsible for this story: Chua Kong Ho at kchua6@bloomberg.net Suresh Seshadri 

http://www.bloomberg.com/news/articles/2015-01-21/toyota-poised-to-lose-global-sales-lead-to-vw-on-china 

Chinese Car Buyers Embrace Online Sales, Dealers Still in the Loop

Car Scoops. January 11, 2015

E-commerce is nothing new, especially in what is probably the world’s most connected country: China. The thing is, Chinese are embracing online sales for new cars, too – and that’s good for business.

Local automaker Geely estimates that it has sold nearly 3,000 units in 2014 online five years after first launching its e-commerce website. “The impact of Internet firms has been a major success for the company”, company spokesman Ashley Sutcliffe said.

Paul Hu, Volkswagen Group China’s chief marketing officer for Greater China and ASEAN, is even more buoyant: “E-commerce in the automotive market is taking off”, he told Wards Auto. “In my personal opinion, online sales in the total car market in China will account for 10 percent in the near future.”

Still, traditional dealers are not left out of the game. One of VW’s joint ventures, Shanghai Volkswagen, is selling cars online through a number of websites; customers place the order in one of the sites but have to close the deal and pick up the vehicle from a dealership.

Kyle Dickie, CEO of dealership best-practices consultancy Sewells Group, thinks that “there is some disruption to come to the distribution model, but it is not imminent. In China, there is an unusually high level of trust still placed in the sales consultant. Consumers want to interact face to face.”

The “disruption” mentioned by Dickie are smartphones. Right now, China is estimated to have more than 500 million smartphone users who, naturally, use their devices buying stuff online. Beijing-based iResearch forecasts that 2014 online retail sales in the country increased by 45.8 percent to 2.76 trillion RMB (US$444 billion).

“Empowered with technology, consumers of mobility services are likely to make choices other than what the automakers and their dealers are offering today”, commented Bill Russo, the managing director of the Gao Feng consultancy firm.

In other words, e-commerce may bring customers to the dealerships – they just might not be interested in the same vehicles the dealer and the brand want to promote.

http://www.carscoops.com/2015/01/chinese-car-buyers-embrace-online-sales.html

China in 2025 and Implications for Automakers

Gao Feng Insights Report, January, 2015

Dear Friends of Gao Feng, 

  

We are pleased to share with you a report titled: China in 2025 and Implications for Automakers.  As we know, China’s economy has been growing dramatically for more than two decades.  China is now the second largest (and will inevitably soon become the largest) economy in the world.  Yet we are recently confronted with rising concern over the impact of a deceleration in overall economic growth, especially in the automotive sector.

Since 2011, we have seen single digit growth in 3 of the past 4 years, raising questions over the future prospects for the industry.  In this analysis, we seek to avoid the trap of “driving by looking in the rear-view mirror”, and instead look in front of us at the plausible scenarios which may unfold which will impact the auto industry over the next decade.

We believe that China’s economic growth is likely to continue over the next decade, driven by a mix of continued (albeit more selective) fixed-asset investment and growth in consumption.  A broad transformation is expected to continue and will present an environment that is characterized by a long-term and sustained shift towards a middle-income, consumption-based economy.  This trend would lead to a profoundly different economic landscape.

We also believe that discontinuities int eh political, social and economic landscape have the potential to reshape China dramatically by 2025.  While the outlook is positive, there will likely be discontinuities - both upward ad downward - along the way.  The key to sustainable success for businesses in such an environment depends on an ability to anticipate the trends and challenges that are in the “blind spots” today - but which can create disruptive threats or discontinuous opportunities for those who can respond rapidly.  In essence, and “early warning system” is needed which leverages unique insights which can be brought to bear on the question of how the market, the regulatory system, and business models may develop over the next decade in China.

  

We welcome your comments and feedback on our briefing paper or in general about our firm. We would be glad to meet you in person to share our data and perspectives in a fuller manner. Please let us know if you are interested in meeting and discussing directly how we can help you to operationalize these insights. 

  

Thought leadership is core to what Gao Feng does. We will, from time to time, share with you our latest thinking on business and management, especially as it relates to China and China’s role in the world.   

  

  

Best Regards, 

   

Dr. Edward Tse
CEO, Gao Feng Advisory Companyedward.tse@gaofengadv.com

Bill Russo
Managing Director, Gao Feng Advisory Companybill.russo@gaofengadv.com

Chee-Kiang Lim
Principal, Gao Feng Advisory Companyck.lim@gaofengadv.com

Tel: +86 10 8557 0676 (Beijing); +852 2588 3554 (Hong Kong); +86 21 5117 5853 (Shanghai)

Gao Feng website: www.gaofengadv.com

China in 2025 and Implications for Automakers from Synergistics Limited

Bill Russo to Brief Investors on the Internet of Vehicles

Coleman Research Group Conference Call

TOPIC:

Building the Internet if Vehicles and Related Smart Car Technologies in China

Date: Tuesday, January 13, 2015

Time:  10AM EST, 11PM China

Venue:  Conference Call

Click here to register (sponsored by Coleman Research Group)

• Traditional auto ownership model re-shaped by rapid urbanization in China
• Disruption of the automotive value chain
• New mobility concepts changing traditional business models
• Unique context of China’s urban transportation challenges
• High rate of adoption of mobile device connectivity driving need for connected car technologies
• Need for OEMs to develop strong relationships with telcos and technology players
• Companies: Ford (F), General Motors (GM), Volkswagen (VOW), Toyota (TM),Honda (HMC), Fiat Chrysler (FCAU), Nissan (NSANY), Hyundai (HYMTF),Daimler AG (DDAIF), BMW AG (BMW), Continental AG (CON), Valeo (EPA),TRW Automotive (TRW), Mobileye(MBLY), Uber, Yidao, Relay Rides, Baidu(BIDU), Alibaba (BABA) and Google (GOOG)

China is the world’s largest auto market and also has highest number of internet and smart phone users which will likely make it an innovator and incubator of smart car technologies. China’s urban transportation challenges, the high rate of adoption of connected mobile devices, combined with the rapid and aggressive introduction of alternative mobility and vehicle ownership concepts will ultimately compress the time needed to commercialize smart, connected car technologies and services.  Investors, automakers and dealers are optimistic that these developments will dramatically revolutionize the Chinese auto market. As a result, OEMs are investing rapidly in the marketplace to gain first mover advantage in the most promising auto market in the world.


ABOUT OUR EXPERT:

Bill Russo is President of Synergistics Ltd and Managing Director and Automotive Practice Leader with Gao Feng Advisory Company, Ltd. He has more than 25 years of experience in the auto industry. He was formerly the 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.

Chinese Electric-Car Maker BYD’s Shares Plunge

The Wall Street Journal, December 18, 2014

A BYD Co. electronic vehicle is charged at an EV charging station at the company's campus in the Pingshan district of Shenzhen, China, Aug. 5, 2014. Bloomberg News

By Colum Murphy

Updated Dec. 18, 2014 10:03 a.m. ET

SHANGHAI—An executive at Warren Buffett -backed BYD Co. defended its business prospects after shares in the Chinese electric-car maker fell as much as 47% on Thursday.

In a conference call late Thursday, company secretary Qian Li said BYD’s operations were normal despite the share plunge and sought to dispel what he called rumors about the company. BYD’s Hong Kong-traded shares regained some ground later Thursday and finished at 25.05 Hong Kong dollars (US$3.23), down 29%.

Mr. Li described rumors circulating in the market about BYD—including suggestions that its founder and chairman had been arrested—as “ridiculous” and urged investors to ignore them.

He also dismissed talk of BYD having large exposure to the troubled Russia market, describing the company’s investment in that country as “very small.”
BYD also produces mobile-phone components and solar panels.

Asked whether the price movement could be related to a selloff in shares by Mr. Buffett’s Berkshire Hathaway investment vehicle, Mr. Li said BYD had been in recent contact with Mr. Buffett but there was no sign that Mr. Buffett was considering a sale. He added BYD didn’t reach Mr. Buffett on Thursday due to the time difference between China and the U.S.

Berkshire Hathaway owns a roughly 9% stake in BYD, according to previous company filings, including about one-quarter of its Hong Kong-traded shares. In the Chinese city of Shenzhen, BYD’s shares fell about 10% on Thursday, the daily limit.

In October, BYD reported a third-quarter profit drop of 26% and said it expects this year’s profit to fall by up to 22%. Auto-sales growth in China has slowed in recent months amid a broader drop in China’s economic momentum.

Overall in the first 11 months of 2014, BYD has sold 384,977 vehicles, down from 458,042 vehicles sold in the same period the year before—a 16% drop, according to data from research firm IHS Automotive.

While the company frequently touts its line of electric vehicles and plug-in hybrids—vehicles that can run on both gasoline and electricity—it relies heavily on sales of traditional gasoline engine cars for the lion’s share of its automotive revenue.

Bill Russo, managing director of consulting firm Gao Feng Advisory, said BYD, like many other Chinese car brands, need to create a brand that appeals to Chinese consumers. “It has to go beyond just being a cheap car,” he said. 

Mr. Li said BYD faces “hot competition” and decreasing margins in the traditional car market in China but said it was transforming into a manufacturer of new-energy vehicles.

China has a long-stated goal of reducing its dependency on imported oil by promoting new-energy vehicles, including passenger cars and buses. China wants half a million such vehicles on the road by next year and 10 times that by the end of the decade.

But in the first nine months of this year, fewer than 40,000 electric vehicles were sold in China, according to data from the government-backed China Association of Automobile Manufacturers. Around three quarters of these were passenger cars. By comparison, around 14.2 million conventional passenger cars were sold in the period.

IHS Automotive researcher Namrita Chow said the high cost of replacing batteries, lack of adequate charging infrastructure and range anxiety—where buyers worry about how far they can travel on a single charge—are all obstacles in the path to high sales growth rates.

She said that BYD had doubled sales of its pure electric e6 car to 2,203 vehicles in the first 10 months of this year compared with the same period last year. Sales for the hybrid Qin had so far reached just over 11,000 vehicles in its first year on sale.

Mr. Li dismissed talk that the Chinese government could be reducing its support of new-energy vehicles, including buses, saying BYD continued to see good order flow for them. “We’re confident on the future of electric buses,” Mr. Li said.
A nearly 50% drop in oil prices over the past six months has pressured green stocks in a number of areas.

“With the oil price down, the global outlook for electric vehicles looks very different from just a couple of months ago,” said Jochen Siebert, a Shanghai-based managing director at JSC Automotive Consulting. “BYD’s electric and hybrid car business will likely be impacted,” he added. 

Write to Colum Murphy at colum.murphy@wsj.com

福特SUV，江铃造

CBN Weekly, November 13, 2014

当福特遭遇增长放缓的“天花板”时，一款新车投放或许能够缓解它目前的困境—但并不足够。

　　对于眼下的福特来说，没有什么比一款新车型的到来更及时了。

　　11月13日，福特在北京全球首发一款新SUV车型撼路者（Everest）。有些与众不同的是，这款SUV将由福特在华合资企业—江铃福特生产，并授权其渠道销售。

　　福特在华的两个合资公司—长安福特和江铃福特，此前一直分工明确：前者主攻乘用车市场，后者则经营商用车。

　　近两年，福特堪称在华进步最快的汽车公司之一。今年前10个月，其在中国销量为90.66万辆，而2012年，这一数字仅为62.7万辆。

　　不过最近，“进步最快”的福特似乎也碰到了“天花板”。9月，福特在华销量9.6万辆，同比下降0.2%，结束了连续28个月的增长。销量回落的主要原因是产能。按照规划，2015年年底，长安福特的年产能将达到120万辆，但至今，近一半的目标还未兑现。

　　在此背景下，福特与江铃的合作就颇值得玩味。2011年，福特推出“1515”战略，计划到2015年在中国投放15款新车型。看起来，福特已意识到，单靠长安福特以及其位于重庆的第三工厂，无法完成这一规划。

　　“正在加速扩张的福特没有理由不调动江铃的资源。”咨询机构思略特公司合伙人彭波对《第一财经周刊》说。

　　2010年，福特开始与江铃在乘用车方面展开合作。2013年，福特将其在江铃汽车(32.10, -0.79, -2.40%)的股份从30%提升至32%。“未来，福特汽车将与江铃汽车构建更紧密的合作关系。”在撼路者的发布会上，福特中国董事长兼CEO罗礼祥（John Lawler）表示。

　　同时，撼路者的推出也意味着福特正在谋求更深入地进入SUV细分市场。

　　在过去几十年里，汽车制造商抛弃了传统巨无霸式的SUV，不断改变其尺寸和底盘、外观设计，以满足城市购车者的出行需要。空间紧凑和油耗更低的本田CR-V以及丰田RAV4都是这种趋势的代表。福特和通用在中国推出的翼博（ECO-Boost）和别克昂科拉（Encore）也都获得了成功。

　　而撼路者定位于中大型SUV，2850mm的轴距，柴油发动机技术，源自福特皮卡车型Ranger的底盘。“中型SUV细分市场是中国也是全球成长最快的领域，”罗礼祥对《第一财经周刊》说，“我们相信这款产品一定能够在市场上寻找到自己的市场需求和亮点。”

　　更重要的是，翼博、翼虎，再加上现在的撼路者，福特在中国已全面覆盖小型、紧凑型和中大型SUV市场。“SUV方面，福特已经超过了通用。它正在中国塑造一个SUV领导者的形象。”高风咨询公司董事总经理Bill Russo对《第一财经周刊》说。在中国，“SUV市场领导者”可是个含金量不小的标签。

　　尽管在商用车领域，江铃还算成功，但除了一款月销量不足3000辆的自主SUV品牌驭胜，它并无太多乘用车的生产销售经验。要让一个长于经营商用车的公司在乘用车上取得成功，还是要冒不小的风险。

　　撼路者将在江铃位于南昌的小蓝基地生产。这个基地拥有一座年产30万辆SUV的工厂，以及一座年产20万台汽油发动机的工厂。同时，撼路者所搭载的柴油发动机与江铃主打的商用车型全顺相同，也可在江铃量产。这些生产线全部符合福特全球标准。

　　除了在中国销售，撼路者还将出口到亚太地区的一部分国家进行销售。欧洲和美国汽车消费市场仍经历着销售疲软，亚太地区则是福特近来业绩表现最为优秀的地区，印度、泰国未来都可能成为这款车型出口的区域市场。

　　从产品本身看，撼路者与江铃原有消费群对接也不算困难。全顺的消费者大都是二三线城市的小企业，强调载物和越野能力的撼路者应该同样能满足它们的需求。

　　但正如彭波所说：“卖全顺，只要价格够实惠，消费者就会掏钱，而卖SUV，销售员的态度、服务质量都很重要。”

　　撼路者首发后的第二天，在上海市闵行区的上海九和汽车江铃4S店中，还看不到任何关于这辆车的介绍。

　　在大约是乘用车4S店一半面积的展厅里，经典款全顺和新一代全顺仍占据中心位置—这两款车依然是上个月的销量冠亚军。两名销售顾问正在向一位住在城郊的私营业主介绍两代全顺的差别。而展厅的另一边，驭胜的展车上则摆放着“全系降价6000元”的广告牌—江铃经销渠道目前的硬件和服务标准，似乎还无法与定价25万元以上的撼路者匹配。

　　江铃汽车总裁陈远清已经公布了渠道改造计划：未来，会增加40%的江铃经销商，并对已有经销商的服务流程进行升级，以符合全球乘用车销售流程上的规范，而全顺与撼路者的销售将由两个团队分别进行。

　　计划能否奏效，就要看经销商的执行力了。“过去几年，凭借全顺的热销，江铃的经销商得到了很多实惠，现在要卖更赚钱的乘用车了，它们应该有能力也有意愿进行升级。”彭波说。

　　目前，这款SUV还未正式公布售价，考虑到上市时间设定在明年，江铃和福特还有时间准备。

　　而对于长安福特和江铃福特这两个合作伙伴，福特称，将为它们制定“双赢的成长计划”。虽然并未透露计划的细节，但平衡两家合资公司利益的方式可能是产品线。“福特必须持续向两个合作伙伴投放足够多的车型。”Russo分析说。

　　罗礼祥曾说，福特目前在中国的首要目标是要保持“激进、富有雄心的增长”。

　　所以，对于福特来说，如何在长安福特和江铃福特的天平两端调整砝码，还并不是一个迫切的问题。目前，在中国市场作为追赶者的它，首要任务仍是不断地增加砝码—无论这些砝码增加到天平的哪一端。

China’s antitrust fines for foreign car companies fail to stall growth

The Financial Times, November 3, 2014

Trading up: premium vehicles cost almost twice as much as in the US

For multinational car companies operating in China, the euphoria from the biggest ever automotive boom in industrial history is finally being tempered by some unexpected risks, most notably a controversial investigation by the National Development and Reform Commission (NDRC) into allegedly anti-competitive behaviour by Audi, Mercedes-Benz and other brands.The investigations have so far resulted in fines that are peanuts in comparison to the vast profits that foreign automakers have enjoyed over recent years – and continue to enjoy.

In July, a joint venture between Volkswagen unit Audi and state-owned First Auto Works was ordered to pay $41m for alleged violations of China’s 2008 Anti-Monopoly Law. This compares with reported operating profits of $12.2bn for VW’s joint ventures in China (its other is with SAIC Motor) last year.

Fiat unit Chrysler was also hit with a small fine this summer, while Daimler’s joint venture with BAIC Motor, which makes Mercedes-Benz saloons, is still awaiting the outcome of an NDRC investigation after one of its Shanghai sales offices was raided in July.

These fines are the byproduct of a wide-ranging investigation that appears to have a much larger aim – forcing car companies, regardless of whether they are in fact guilty of anti-competitive practices, to lower the prices of their vehicles, spare parts and services.

According to one industry executive, the head of a multinational company’s China operations has told visiting board members that, in view of the NDRC’s offensive, his biggest fear is of a sudden shift in government policy. “It’s bad for business,” the executive says of the investigation. “It has made the investment environment very uncertain.

“If people can afford the cars, they can afford the spare parts and after-sales service,” he adds. “It’s not like the NDRC is lowering the price of medical care or making food cheaper.”

Foreign automobile executives argue that the relatively high prices asked for cars – especially premium vehicles that can be almost twice as expensive in China as they are in the US – is a function of unprecedented demand, even for overseas models subject to expensive import taxes.

China’s car craze began in earnest in 2008-09, during the depths of the global financial crisis, when it overtook the US as the world’s largest car market. 

Demand from entire generations of first-time drivers soared in the world’s second-largest economy, just as purchasing power collapsed in the US and Europe – a nadir symbolically marked by Washington’s bailout of General Motors in December 2008. 

Over the ensuing half decade, foreign carmakers in China, especially long established ones such as Volkswagen and GM, had a license to print money. 

Even last year, when double-digit annual growth was finally expected to taper, annual sales grew by about 15 per cent to 18m passenger cars – 10 times as many as were sold in India.

This year began in similar fashion, especially for foreign brands and their Chinese joint venture companies. Sales of Chinese brands, however, began to fall sharply and their share of the passenger car market tumbled from 27 per cent to 23 per cent.

The precipitous fall-off in sales of local brands and slower economic growth has forced the China Association of Automobile Manufacturers to lower its projection of an 8.3 per cent increase in year-on-year sales this year to 4.6 per cent – two-thirds down on last year.

In the first quarter, Geely, the private sector carmaker most famous for its purchase of Volvo Cars from Ford, saw sales of its own-brand vehicles fall by as much as 40 per cent over the same period a year earlier. 

This was despite a gradual improvement in the quality of local-brand cars in China, according to Geoff Broderick at JD Power, which publishes an annual customer survey of 212 models across 62 brands. “The domestic brands are doing exactly what they should be doing – focusing on quality,” Mr Broderick says. “But as we see the quality gap closing, we’re not seeing a pick-up in [local brands’] market share.”

Investigations have so far resulted in fines that are peanuts in comparison to the vast profits that foreign automakers continue to enjoy

One reason for the fall has been a counterintuitive NDRC requirement that foreign-invested joint ventures develop a local brand for the China market, such as the Baojun saloon manufactured by GM, SAIC and Wuling. Many of these new entrants are priced to compete against domestic rivals, especially in smaller cities where car ownership rates are relatively low.

“I don’t understand what the Chinese government’s objective was in encouraging foreign companies to create local brands,” says Bill Russo, a Shanghai-based industry consultant. 

“It only cannibalises already distressed sales of local brands. I think the intent was for more technology to be shared by the foreign companies. But the unintended consequence is to take volume from local carmakers producing similar products,” he adds.

At the other end of the spectrum, foreign carmakers continue to thrive in saturated markets such as Beijing and Shanghai, where premium brands such as Audi, BMW and Mercedes-Benz account for a quarter of the market. 

Even now, limits on expensive new licence plates to combat congestion and pollution are spurring their sales, as existing plate holders trade up.

“As cities implement plate restrictions, people gravitate towards premium foreign brands,” says Mr Russo. “They want to put their expensive plates on the best piece of automotive technology that they can.” 

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