New Luxury Models From Geely, Great Wall Target Evolving Market, Seeking Market Share From Foreign Brands
At the Shanghai Auto Show, foreign car executives have been discussing the prospects for their brands in the mainland China market as domestic carmakers begin to move beyond their traditional low price-point and into more high-end, luxury segments.
While it is well established that this is easier said than done, as foreign automakers have all but cornered the China market up to this point — with the exception of China’s traditional domestic luxury carmaker, Red Flag — new opportunities afforded to domestic manufacturers from weakness in their foreign competitiors from the global economic crisis, an increasingly receptive consumer base, and government subsidies may lead to a significantly more competitive high-end car market in China in coming years. While it won’t be easy for high-end domestic Chinese car companies to pull buyers away from the foreign luxury brands they’ve become so fond of over the last 20 or so years, they’re well-capitalized and motivated to put in the necessary time and effort.
While foreign car execs rightfully feel that their vehicles will continue to dominate the luxury car market for several years to come, the moves by Chinese automakers Chery, Geely, Great Wall, and others to move into this highly-competitive, lucrative market do present a major shift. Seeing how Porsche chose the Shanghai Auto Show for the debut of its new sedan, the Panamera, and GM reiterated its commitment to growing in the China market, foreign auto execs know that the Chinese market will no longer be a cakewalk, and they will have to redouble their efforts to keep their dominance in coming years — particularly in lower price-points, but gradually in the high-end as well. As Reuters reports,
Reaction to the attempt [by Chinese carmakers to move into the luxury market], coming less than a decade after motorisation began in earnest in China, ranged from nervousness to downright scepticism from established global players sharing the floor at the show, which opens to the public on Wednesday.
“I don’t find it surprising at all that the Chinese are looking to go into the (high-end) market,” BMW AG’s global sales chief, Ian Robertson, said at the sidelines of the auto show this week.
“It’s a natural progression, and the advantage that Chinese manufacturers have with the large local market is big. I never underestimate competition,” he said.
While these execs obviously are sure that competition with Chinese luxury autos is far from imminent, especially internationally, they are quick to note that it is inevitable:
Nissan Motor Co Senior Vice President Andy Palmer said he had seen a vast improvement in the craftsmanship of Chinese cars from seven years ago when the market — now the world’s biggest — was just starting to emerge.
A sizeable distance still remained, but he warned against writing off the scope for further improvement.
“Thirty years ago, the image of Japanese cars was that they rusted,” he said. “So that’s how much things can change.”