|     |  

Moving Into The Fast Lane

Mark Andrews 2016-02-14 13:24

Back in the 1980s the Chinese government set out to create a modern auto industry. Recognising how far the existing producers were behind the market leaders, they invited foreign brands to set up joint ventures (JV) with these state owned enterprises (SOEs), the idea being that the SOEs would receive technology and be able to eventually produce their own competitive cars. Unfortunately, things didn’t quite go as planned. China did become the largest car producer, but still the majority are made by the JVs. With the exception of Chang’an, these companies have struggled to produce vehicles that are as appealing as the JV models. The real challenge to the JVs is being mounted by newer private companies.

A few years ago there were at least a hundred supposed car producers in China. All had grand ambitions, but they were often armed with little more than a shed and a photocopier. This has thinned considerably and there are now three companies (Geely, Great Wall, and BYD) at the forefront of China’s global car ambitions.


1534226497439480.jpg


Chinese cars used to sell on the fact that they were cheap, but now many companies are turning to the "more-for-less" strategy used to such a great effect by the Korean producers. The leading Chinese manufacturers have upped the features on their models particularly in the form of electronics, to match ones often previously only found on premium brands. This of course comes at a cost. Five years ago it was rare to find a Chinese car above RMB150,000 with most below 100,000. Today many are pushing 250,000 with some cars, such as the BYD Tang Ultimate special edition, commanding a whopping 518,800.


1534227664446138.jpg


How do Chinese cars match up to the competition? All three leading producers have been through a copying stage in design and BYD are arguably still there – last year’s Tang is heavily in uenced by the Lexus RX. The GC9 is the first Geely since designer Peter Horbury went over from Volvo and shows what can be achieved. Great Wall’s more recent offering suffers from being generic, but this is likely to change with the introduction in 2016 of the first cars to be designed by Pierre Leclercq, who while at BMW was responsible for the X5 and X6.

The interiors of Chinese cars used to be terrible with poor quality materials, but in cars such as the Tang, GC9 and Great Wall’s Haval H9, these have been replaced by soft plastics and plush leather. “Chinese car producers have problems with integration ability. International car-makers can control big suppliers to provide the best technology for their cars.” says David Zhang, an independent automotive industry analyst consultant. It seems however that the leading brands are getting there.


1534227691212329.jpg


For many years the car industry had incremental improvement in core technology from one model generation to the next, but more recently there have been many disruptors that stand to radically change the whole industry. Firstly, there seems to be momentum gaining in the shift to new energy vehicles. Then there is the emergence of technology for self-driving cars, but coupled with this, there are questions about the very notion of car ownership. Currently it is difficult to assess whether these put Chinese producers at an advantage or potential disadvantage.

A modern turbo charged petrol engine should produce 100hp for each litre of dis- placement. All three leading manufacturers have managed this with at least one engine. Great Wall’s 2.0T as tted to the H9 produces a highly respectable 214hp. Also they have all managed to either produce or buy in the latest dual clutch gearbox technology. However, they lag in terms of fuel economy and resultant emissions.


1534227719424527.jpg


BYD is the current Chinese market lead-er in electric and plug-in hybrids. The Tang uses less than two litres of fuel per 100km while giving acceleration time to 100km/h in under five seconds. Geely announced at the end of last year its Blue Geely Initiative which sets out to have 90% of sales made up of new energy vehicles by 2020. At the Guangzhou Auto Show in November, the company launched its first mainstream electric car, the Emgrand EV, which has a range of up to 330km. Great Wall has yet to publicly commit to any new energy strategy.

“The 2015 Shanghai Auto  Show had an incredibly large number of connected car concepts and production models on display, particularly by  Chinese automakers,” says Ce- lina Li, automotive technology senior analyst for IHS. This is likely to be the next major area for a push by Chinese producers. Baidu is already in the market with CarLife (similar to Android Auto and Apple CarPlay) and recently launched the more advanced MyCar. This may be an area where Chinese brands manage to outmanoeuvre the more established competition.


1534227758286735.jpg




Tips:

BYD

Founded in 1995, Listed on the Hongkong stock exchange on July 31st, 2002, and located in Shenzhen, Guangdong, China, the company is a highly innovative private enterprise with state of the art IT, and new energy departments.

GEELY

Founded in 1986, Geely Automobile is one of only ten private companies in the Chinese national auto industry. In December 2009, Geely acquired 100% of  Volvo.

Great Wall

Founded in 1984, the company headquarters is located in Baoding City, Hebei Province. The Great Wall Automobile company is China’s first such enterprise to be floated on Hongkong's stock exchange. It has the largest Pickup and SUV factory and is a transnational corporation.



follow us
newsletter:
Thank you for subscribing Vantage Shanghai newsletter. We will provide high lifestyle stories and interactive event invitation for you via the newsletter.