Bill Russo to Chair Automotive CEO Dialogue at JP Morgan China Summit

Bill Russo to Chair Automotive CEO Dialogue at JP Morgan China Summit

Beijing, China, June 10, 2014

Venue:  Grand Hyatt Hotel, Beijing
Time:  2:00pm

Discussion Topic: China’s Auto Industry:  Adapting to a More Sophisticated Market Jochem Heizmann Member of the Board of Management of Volkswagen AG, President & CEO Volkswagen Group China Chair: Bill Russo

Ford Gets In The Fast Lane

CKGSB Knowledge, February 19, 2014

The high-decibel Shanghai launch of the all-New Ford Mustang

US automobile major Ford is stepping on the gas in China, the world’s largest auto market. Can it catch up with rivals General Motors and Volkswagen?

In December 2013, an enormous red dome appeared on the banks of the Huangpu river in Shanghai. Nearly 450 people converged under this dome, and watched spellbound as a 360-degree screen projected dazzling images. And with great fanfare, Ford Motor Co. launched the all-new Mustang.

Auto enthusiasts are used to high-decibel car launches such as this one. The glamor, glitz and festivity is now pretty much de rigueur.

Yet the Mustang launch was special for one reason. It signaled very clearly that China was now a key market for the Dearborn, Michigan-based automaker: the Shanghai launch event was one of the six global events occurring simultaneously in Sydney, New York, Los Angeles, Dearborn and Barcelona.

Ford has had China on its radar for a while now. As early as the 1910s the company exported its iconic Model T to China. It set up a presence here in 1995. In 2009, it even moved its Asia headquarters from Bangkok to Shanghai to increase its market penetration and capture a larger share of China’s auto pie. Ford makes for an interesting case study at this point for two reasons. One, it surpassed Toyota and Honda in sales to move up to the fifth rank in China. Two, Ford Focus has emerged as the top selling nameplate (as per IHS Automative sales data) in the passenger vehicle market in the country in 2013. Interestingly, while Ford registered a 35% gain in sales in December, GM, which had occupied the number one position so far, saw a slump of 6.3%.  (See chart below.)

The year 2010 marked a clear turning point in the history of the automobile industry. For the first time in 120 years, the US market was no longer the biggest. In a special report published in September 2013, American financial services company Standard & Poor’s (S&P) called it a “shift in the balance of power in the auto industry”. The scale had tilted in favor of the emerging markets led by China, India, Brazil and Eastern Europe. Together they accounted for slightly more than one half of the 73.2 million light vehicles sold worldwide in 2010! The share of emerging markets has steadily grown since–in 2011 it was 52%; in 2012, 54%; and in 2013, 55%.

Clearly, this trend held promise. And China, having overtaken the US, has emerged as the largest single-country, new-car market. Demand shot through the roof, telling the best of analysts how conservative their estimates had been. McKinsey & Co in its report, Bigger, Better, Broader: A Perspective on China’s Auto Market in 2020, estimated sales in China to touch 22 million in 2020. Way too late, considering that China came pretty close to achieving that feat in 2013 itself. If estimates by the China Association of Automobile Manufacturers (CAAM) hold true, the market will grow by 10% this year, taking the sales figure over 24 million.

McKinsey’s findings stemmed from the optimism imbued in the Chinese economy and those factors are still intact. Between 2011 and 2020, the Chinese economy is expected to continue growing at 7-8% annually; the percentage of the population residing in urban areas is expected to rise from 51% to 60%, thus giving a fillip to mobility demands; and the number of high-income urban households is likely to expand from 17% to 58%.

Neil Wang, Partner and Managing Director for business consulting firm Frost & Sullivan, China, reiterates: “China has become one of the most important markets for all global car manufacturers as most of them are facing a decline in demand caused by severe economic downturn.” As the recession set in, the Big Three–General Motors (GM), Ford and Chrysler–faced tremendous heat in the US. Unlike GM and Chrysler, Ford abstained from filing for bankruptcy and instead took a $23.5 billion secured loan by putting its iconic blue oval logo as collateral. Calling China a savior may not be wrong. Consider GM’s vehicle sales volume for year 2010–73.6% of it was generated outside the US, including 43% from emerging markets, such as Brazil, Russia, India and China (BRIC). For Ford as well the Asia-Pacific and Africa region (APA) is the fastest growing. By the end of this decade, it expects 60-70% of its growth to come from APA. China undoubtedly remains the star of the region.

Bill Russo, President and CEO of Synergistics Ltd., an automotive consultancy based in China, agrees on China’s prospects. “Urban middle class population and GDP levels will continue to rise, driving expansion. Rising wealth will continue to allow for a strong mix of premium models. Moreover, Chinese consumers favor famous foreign brands. Three out of four passenger cars sold in China carry a foreign brand.” According to CAAM too, the market share of Chinese brand passenger cars has continued to decline, making China the best bet for foreign players like Ford, GM and Volkswagen.

The ‘15 by 15’ Model

Ford China, one of the frontrunners eagerly seeking to tap China’s potential, is upbeat. The company sold 935,813 wholesale vehicles in China in 2013, a 49% increase over the previous year. John Lawler, Chairman and CEO of Ford China, interpreted the impressive performance as a “demonstration” of the continued progress of Ford’s “aggressive China growth strategy”.

Interestingly, the American auto major has pretty much adhered to the same strategy with which it entered China about two decades back–leveraging its global assets while simultaneously investing in local capabilities to bring a full line-up of vehicles. 

Research helped Ford understand that discerning Chinese customers keep in mind a number of factors before buying a car–fuel economy, design, how the vehicle matches their personality, etc. “(A) car is a major purchase in life, especially in China… it is a whole family affair where everyone, right from the buyer’s spouse to kid to parents, comes for the test drive and acts as a major influencer,” says Lynn Ouyang, a communications executive at Ford Asia Pacific.

Next steps followed. Regular surveys were conducted to understand customer’s preferences. Ford embedded Chinese and Indian engineers in product development groups so that local tastes could be designed into its vehicles. “The Chinese prefer robust back seats for sedans, plush leather, more in-car entertainment options… At the same time China is a very cost-conscious and diverse market,” adds Ouyang.

In adherence with the global One Ford plan (introduced in 2008, the One Ford plan seeks to balance Ford’s cost structure with its revenue and market share, accelerate development of new vehicles that customers want, finance Ford’s plan and rebuild its balance-sheet, and work together to leverage its resources around the world), Ford’s portfolio in China was created to include a full family of vehicles–small, medium and large. From performance vehicles (Focus ST, Fiesta ST), and sport utility vehicles (Explorer, Edge, Kuga, EcoSport), to sedans (Mondeo, Focus, Fiesta, S-MAX) and commercial vehicles (Transit).

In March 2012, while launching the Focus, Ford vowed to bring 15 new vehicles to China by 2015. So far, the plans seem to be on track. Last year Ford launched seven new vehicles in China—Focus ST, Fiesta ST, Explorer, Kuga, EcoSport and the all-new Ford Mondeo.

Focus, the sporty mid-size car, turned out to be the game changer for Ford. A bestseller, it led the fleet in 2013 as well with 403,640 wholesales (cars sent to dealerships) sold, up 36% over the previous year. It helped that Ford became the lead sponsor of singing reality show Chinese Idol and was able to connect with the masses. It was a tried-and-tested marketing strategy (Ford also sponsors American Idol in the US) that, Ouyang says, worked well in China as well. In terms of marketing strategy, Ford has also decided to have a pretty robust online presence in order to gain the attention of the 600 million internet users in China.

Gaining Ground in China

But anyone who has travelled to China knows that it is not just a country of the masses. According to a Research and Markets report titled Global Luxury Car Market: Trends & Opportunities (2012-2017), by 2017, the US and China will collectively represent 50% of the global premium opportunity in automobiles. Keeping this in mind, Ford is drawing up plans to introduce the Lincoln brand, a line that has a history spanning a century, in the latter half of this year. These cars will be imported and distributed through an all-new independent Lincoln brand dealer network. Ford’s vision for Lincoln in China is ambitious. “(The idea is) to attract luxury car buyers and offer a very personalized connection with the dealer, that individual touch which makes the brand different,” says Ouyang.

Ford’s roadmap for the future remains unchanged–refreshing the product lineup, expanding the dealer network, and enhancing the production capacity. As part of its strategy, it is looking at strengthening the regional operation by locating its Asia-Pacific team in China. Ford has been operating in China through two joint ventures (JVs): Changan Ford Automobile (CAF) and Jiangling Motors Corporation Ltd. (JMC), which assemble Ford and JMC vehicles for distribution in China. It sure is shifting gears and getting into the fast lane here. “China is the world’s largest growth market, and we expect tier 4 to tier 6 markets to see the greatest growth over the next five years. To cater to the diversified needs, we will further expand our vehicle offerings to increase our market coverage in China from 22% in 2009 to 50% in 2015. We will also more than double the number of CAF dealerships from 340 (as in 2010) to 700 by 2015. JMC dealerships will also almost double from 116 in 2010 to 220 in 2015,” adds Ouyang. Ford has planned to open most of the new dealerships in tier four to tier six cities. Each dealer is chosen with utmost care–one that offers high level of customer service and does not hard sell to customers.

China’s auto market is not an easy one to navigate. Bill Russo of Synergistics Ltd. says the first order drivers of success in the market can be linked to product relevance and brand acceptance which are often the barriers to market entry. “While these are essential, the secondary drivers of success are more complex,” he says. These include local partner strategic alignment, JV management, R&D localization, competitive cost structure/local sourcing, manufacturing localization, and distribution network capability (for sales and service). According to Russo, the market leaders are Volkswagen (with SVW and FAW-VW/Audi), General Motors (with SGM and SGM-Wuling), Hyundai (with Beijing Hyundai), and BMW (Brilliance-BMW).  “More recently, Ford has gained ground because they are investing in introducing new products which allows them to clear the first-order drivers of success,” he adds.

Here’s a glimpse: Ford has invested over $4.9 billion in China and employs over 26,000 people in its wholly-owned entities and JVs. It currently has nine plants in the country, including three new plants and a research and engineering center under construction. Success in terms of financial returns is difficult to judge because Ford does not break up its revenues country-wise. “Ford Asia Pacific will account for 60-70% of the company’s growth in the next 10 years. China is a big part of it,” says Ford’s Ouyang.

Frost & Sullivan’s Neil Wang points at two crucial challenges that may have a bearing on the success of any MNC auto major in China: the local governments from Tier 1 and even Tier 2 cities, including Beijing, Shanghai, Guangzhou and Tianjin have issued strict policies to control the growth of vehicles. “More cities, like Chongqing, Chengdu and Hangzhou, may issue similar policies to limit the new car sales and registration to ease the issues of urban traffic congestion and air pollution in the coming future. The pricing strategy is equally, if not more, important. Majority of the Chinese customers are first-time buyers and are therefore quite sensitive towards the cost of affording a car—the retail price of the vehicle and even the upcoming maintenance cost.”

Ford is trying to address these concerns. “Locally-produced vehicles do have a price advantage over imported ones,” says Ford’s Ouyang. So as the vehicles roll out of Ford’s manufacturing plants, the Chinese customers stand to gain in terms of price value. He adds, “When we produce 1.2 million vehicles locally, the scale will help us in achieving resource optimization and in getting better prices from the suppliers. We will be able to pass on that value to our customers.”

For the rising environmental concerns, Ford banks on technology to improve fuel efficiency and reduce carbon dioxide emissions. It is working towards bringing 20 new powertrain products to the country and improving fuel economy by up to 20% (compared to 2010) by 2015.

Despite the fact that Ford entered China almost two decades back, it has much ground to cover before it can inch closer to GM and Volkswagen, the two players that currently lead in China. The two early birds started investing heavily in China in the 1990s, long before Ford. But for now, there is no denying that Ford is playing the catch-up game pretty well. 

Click here to read this article at CKGSB Knowledge

Bill Russo to Join Panel Discussion at China Automotive Chongqing Summit

Chongqing, China, June 5, 2014

TOPIC:

New strategies for new energy vehicle market

Under the pressure of environment protection and energy structure, China has paid great attention to the development of energy saving technology and new energy vehicle industry. Sales of China’s new energy vehicles reached 6,853 units in the first quarter of 2014, a year-on-year growth of 120%, but still lagged far behind the target. Meanwhile, technologies and applications of new energy vehicles are quite different from those of conventional vehicles. Do we need new market mode and what shall we do in terms of system construction to stimulate the growth of new energy vehicle market?

• Marketing strategies for constructing new energy vehicle system
• Thoughts on the change in marketing tactics, channel pattern, market environment, technology and service 

China’s indigenous brand policy backfires

The Financial Times, May 5, 2014

Even the most ardent car lovers would struggle to identify some of the vehicles built by major multinational auto companies in China.

A BMW Brilliance Zinoro, an SGMW Baojun and a Dongfeng Nissan Venucia are among the “indigenous” brands that the Chinese government requires foreign-invested joint ventures to develop in return for approvals to expand production capacity in the world’s largest auto market.

SGMW – GM’s joint venture with SAIC Motor and Liuzhou Wuling Motors – embraced the dictat by developing popular Baojun sedans and mini-cars. SGMW sold more than 100,000 Baojuns in 2013, up almost 20 per cent.

Priced at just Rmb50,000 ($8,000) to Rmb70,000, Baojun’s success has come primarily at the expense of China’s struggling domestic automakers, suggesting that the policy has had at least one unintended consequence.

“After several decades in China, the earliest models introduced by the foreign joint ventures are now priced as cheaply as Chinese brands,” Liu Bo, vice-president of Chang’an Auto, said at a seminar held in conjunction with April’s Beijing car show. “Their ability to focus global R&D resources on the China market is putting a lot of pressure on us.”

March sales of Chinese brand sedans fell 12 per cent year-on-year, as local automakers lost their market lead in the segment to their German rivals led by VW. “The indigenous brand policy is really dumb because all it does is cannibalise the local Chinese brands,” said Janet Lewis, head of Macquarie Securities industrials research team in Hong Kong.

The damage that Baojun and other joint ventures’ indigenous brands, such as Nissan and Dongfeng Motors’ Venucia, are inflicting on Chinese car companies could explain why the government does not appear to be putting much pressure on multinationals who have only done the bare minimum.

BMW’s joint venture with Brilliance Auto “rebadged” the German company’s X1 and electrified it for China’s anaemic new energy vehicle market – thus avoiding confusion with its better selling conventional cars – while Ford has yet to reveal its local contribution to the market.

“Zinoro is a brand of our joint venture here in China,” Karsten Engel, BMW’s country head, said at the Beijing car show. “It’s a brand only for China. It’s based a little bit on the BMW X1.”

BMW chose not to display the Zinoro at the show, instead highlighting its premium i3 electric car. “BMW’s i3 could generate interest in China,” said Bill Russo, founder of industry consultancy Synergistics. “Zinoro doesn’t have the brand panache. Even if it’s an X1 [customers] want to be able to call it what it is.”

The Chinese government’s indigenous brand requirement is particularly challenging for Ford as it runs counter to outgoing chief executive Alan Mulally’s “one Ford” strategy, under which the company jettisoned brands such as Jaguar Land Rover and Volvo Cars to focus on a narrower portfolio.

“We were trying to be world class at so many things,” said Mr Mulally, adding that the strategy was in keeping with the vision of the company’s eponymous founder. “Henry [Ford] wanted to be part of the fabric of economic development in every country in which he operated but he didn’t know that Ford would have a different Ford in every country.”

John Lawler, the head of Ford’s China operations, insisted that the US automaker is in compliance with Chinese government policy mandates, even though it still has not rolled out an indigenous brand.

“We’re satisfying all the requirements from the government but at this point there really isn’t anything for us to announce relative to an indigenous brand or anything along those lines,” said Mr Lawler.

Additional reporting by Wan Li

Click here to read this article at FT.com

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

Bill Russo to Chair Automotive Panel Discussion at 19th CLSA Forum in Beijing

Beijing, China, May 12, 2014

Venue:  Grand Hyatt Hotel, Beijing
Time:  11:30am

Panel Discussion Overview: China’s Automotive Market in Transition Following a decade of rapid growth that culminated in a stimulus-driven surge in demand in 2009-2010, the China auto market sharply decelerated, with growth slipping to 2.5% in 2011 and 4.3% in 2012.  This brief slowdown was followed by 14% growth in 2013, with overall sales exceeding 22 million units.  While the market growth has been spectacular, there are rising concerns on the sustainability of this performance as the market may be approaching a saturation point in the traditionally strong coastal regions.  Intense competition among automakers as they pursue emerging growth opportunities in specific regions and segments is anticipated.  The aim of this session is to discuss opportunities and challenges faced by different competitors as they deal with this a transitional period in the world’s largest automotive market. Opportunities and challenges in luxury and imported vehicles market Opportunities and challenges in emerging provinces and cities, as well as in second and third tier cities Sales and marketing strategies to exploit these opportunities Strategies to diversify profit streams and maximize profit opportunities Structural changes that may occur as the market transitions to a slower growth pattern Mr. Uwe Stadtler, CEO of BMW Automotive Finance (China) Co., Ltd. Mr. Manto Wong, CFO, Ford China Dr. Joerg Mull, China EVP and CFO, Volkswagen China Moderated by: Mr. Bill Russo Click here to for a description of the 19th CLSA China Forum

Global carmakers seek China inroads

The Financial Times, April 18, 2014

There will be no Easter holiday for many senior US and European auto executives as they abandon their families and battle jet lag at the largest car show in the world’s largest car market.

The Beijing International Automotive Exhibition, or Auto China 2014, opens on Sunday at a time when the importance of the fast-growing China market to the fortunes of multinational car companies has never been clearer.

In the first quarter of this year passenger vehicle sales in China rose 10.1 per cent to 4.9m units, including a monthly record of 1.85m units in January – a figure that exceeded the 1.8m passenger vehicles sold all of last year in India, Asia’s third-largest economy.

From mass market automakers such as GM to luxury manufacturers Daimler and Ford unit Lincoln, global success depends on success in China.

“Two, three years ago Beijing was an emerging show. Beijing is now on everyone’s calendar,” says Robert Parker, president of Lincoln China. “I told my wife I’d miss her birthday and my children that I’d miss their Easter egg hunt, but all of [Ford’s] executive and leadership team has done that.”

One executive who will not be in Beijing is Mary Barra, GM’s under fire chief executive. But far from the recall scandal that has erupted in GM’s home market, the US automaker expects to sell its one millionth vehicle in China this year during the show.

That puts GM on track to comfortably exceed the 3.2m passenger vehicles its joint ventures sold last year in China, GM’s biggest market accounting for about one-third of total sales. Analysts at Morgan Stanley estimate that joint-venture dividends and royalties from China contribute almost 60 per cent of GM’s free cash flow.

Lincoln will formally enter China’s luxury market, currently dominated by Audi, BMW and Mercedes-Benz, later this year. It is also unveiling a new car at the Beijing show – something it has never done before outside the US.

Bill Russo, founder of automotive consultancy Synergistics, predicts that popular “crossover” models – part sedan, part SUV – and technology features will garner much of the attention at Auto China 2014. “You can’t just come into the market with a car,” he says. “You have to show that you’re different from everyone else because the passenger car segment in China has become very crowded and hyper competitive.”

The competitive pressures are being felt most acutely by China’s largest domestic auto manufacturers, which some analysts feel are on the verge of a crisis.

At the end of last year, Chinese-brand passenger sedans commanded 27.5 per cent of the market, according to the China Association of Automobile Manufacturers, with German sedans in second with 24.3 per cent. Just three months later, German sedans lead with 27.1 per cent compared to 23.7 per cent for their Chinese rivals.

The collapse has triggered an intense debate among Chinese car companies and policy makers about whether shock therapy – in the form of a relaxation of the industry’s 50 per cent foreign ownership limit – is required.

Critics say the policy has encouraged passivity among large state-owned car companies, which enjoy a steady flow of profits from their joint ventures with foreign manufacturers while failing to develop own-brand vehicles that can compete domestically, let alone in Europe and the US.

China’s largest carmaker, SAIC Motor, sold just 230,000 of its own-brand cars last year, compared to the more than 4.7m units sold by its joint ventures with GM and Volkswagen. Sales for China’s “domestic big 5”, which in addition to well-regarded private-sector creations Great Wall Motor and Geely include BYD, Changan and Chery Automobile, are down 10 per cent this year.

“The dramatic decline in domestic [brand] sales so far this year has exceeded even our bearish expectations,” Bernstein Research analyst Max Warburton wrote in a recent note. Bernstein had projected the market share of Chinese brand cars would decline by 2.5 percentage points over the next two years but instead, their share fell 2.6 per cent percentage points in the first quarter of this year alone.

Click here to read this article at FT.com