Monday, 21 Augst 2017 | 13:44 WIB

Chinese Auto Brands Moving Up The Ranks at Home

Changan's new SUV at the Shanghai auto show (Nikkei Asian Review)

SHANGHAI, NETRALNEWS.COM - State-owned Chinese automakers are working to develop more models under their own brands in an effort to prepare for intensifying competition in the world's largest auto market.

Chongqing Changan Automobile unveiled a new sport utility vehicle, the CS55, at the 17th Shanghai International Automobile Industry Exhibition. Equipped with a 1.5-liter engine, the vehicle combines the enhanced performance of core components supplied by Japanese companies with a bold color scheme from a European design team. It will debut as early as July.

President Zhu Huarong said the company has become the representative Chinese auto brand, and revealed plans to build a 4 billion yuan ($581 million) research and development center in Chongqing to strengthen that brand power. The site will focus on developing SUVs, sales of which jumped about 50% on the year in the January-March quarter.

Changan, which partners with such foreign players as Suzuki Motor, Mazda Motor and Ford Motor, sold 3.06 million vehicles groupwide in 2016. Original-brand vehicles accounted for 1.72 million of that. Zhu says the company plans to raise this to 2.3 million in 2020.

Guangzhou Automobile Group (GAC), which counts Toyota Motor and Honda Motor among its partners, exhibited the GS7 five-seater SUV, along with some concept cars. Sales of original-brand Trumpchi vehicles reached 370,000 units last year. The company plans to set up an R&D site in Silicon Valley and eventually develop autonomous driving technology.

It will invest 10 billion yuan by 2020 in R&D and production, and aims to increase unit sales to 1 million by the same year, according to GAC General Manager Feng Xingya.

Graduating to original-brand ops

Chinese brands are growing on the know-how learned via joint ventures, progress that has raised the quality of the country's passenger vehicles, noted an official at a U.S. automaker. In many cases, engineers and managers with experience in joint ventures are reassigned to original-brand operations.

Yasuhide Mizuno, who oversees Honda's Chinese operations, says that local manufacturers with high cost efficiency and top-notch designs would become formidable contenders when they cultivate brand strength. A male office worker who recently bought a Changan SUV said he was happy with the large vehicle's reliability and affordable price.

SAIC Motor, whose Roewe line has gained in popularity, plans to grow the brand's dealership network to more than 500 by the end of the year, up from 400 now. The carmaker's monthly sales exceed 20,000 units, and it plans to boost its SUV and electric vehicle lineups.

The Chinese government has required major foreign automakers to operate via joint ventures as a way to protect the domestic auto industry. Yet the U.S. under President Donald Trump is now pressing Beijing to lift such requirements.

The National Development and Reform Commission, which steers economic policies, is considering easing rules about joint ventures this summer, a top official at the body revealed.

New-auto sales in China grew 13.7% last year to 28.02 million units, the most in the world. This year, due to scaled-back tax breaks for compact vehicles, the growth is seen slowing to about 5%.

China is becoming a key battleground for domestic and foreign automakers alike. Chinese players must urgently develop appealing products on their own.

New frontier

Non-state-backed Chinese automakers without joint venture partnerships are also working hard to cultivate new markets and improve the appeal of their products.

Zhejiang Geely Holding Group plans to roll out the 01, the first mass-produced model under new brand Lynk & Co. in the fall. The biggest feature of this model is the vehicle-sharing function.

The owner can specify a time when the car will not be used and make it available to others. People can find an available car via a smartphone app and use an electronic key to enter and drive.

Since strangers will be allowed to drive the car, it will come with a manufacturer's warranty that never expires, compared with the usual three-to-five-year warranty. Younger people are the main target group. Pricing and other details will be set by the fall.

Great Wall Motor showed off the VV7, the first model of the luxury brand Wey. At some 180,000 yuan, the price is nearly double that of other models sold by the company. This is an effort to extricate itself from the intense price competition among Chinese automakers.