FI accelerate into Chinese car market
hengzhou - Japanese automaker Nissan has increased its investment in Zhengzhou Nissan Automobile Co. (ZNAC) from 5 to 30 percent AutoAsia Online (AAO) reported. ZNAC builds Datsun brand pickups developed by local partner Dongfeng Automobile group. Nissan also stated to have plans to set up a passenger car production venture with Dongfeng this year. This move will allow the company to reach more of the market and make it into a serious competitor in China,AAO reported. Due to an increase in imports and decreases of sale prices car profit margins will be squeezed down even more but this fact hasn't stopped the major car builders of the world to invest into the Chinese car industry. MG Rover Group and China Brilliance Industrial Holdings (CBIH) entered
a long term alliance at the beginning of April to finance, develop, manufacture and market their vehicles, AAO reported. The cooperation will enable MG Rover made cars to be built in China. The company has also revealed plans to jointly build a new small car as plans are setup for more possible models. Together the companies will cooperate on the supply and manufacturing of engines and the development of a new range of engines. MG Rover will supply the technical support and assistance which will eventually become a research and development centre in China. Volkswagen, the first foreign car maker to enter the Chinese market arrived in 1985 and virtually took over the market. About 90 percent of itscustomer base was state funded. Volkswagen predicts by 2002 sales will rise 7.5%, mainly because of its aggressive efforts to cultivate customers, the Wall Street Journal stated on Monday. BMW has restated its Asia intentions and hopes to raise it sales to one-quarter of its global volume. Total Asia sales in 2001 accounted for 7 percent of BMW's global sales, AAO wrote. The company said it is confident about the rising sales of luxury cars in the Asian market. Toyota said it will aggressively expand in the emerging Chinese market. It wants to boost the appeal of its vehicles, it has announced the launch of the Scion, give its overseas affiliates more autonomy, AAO wrote on Monday. Carmaker Fiat has launched the China version of its Palio world car through Nanjing Fiat, its 50/50 joint venture with Yuejin Motor Group. The Nanjing assembly plant is said to roll out 30,000 Palios this year, according to AAO. Tianjin Automotive Xiali Co., Toyota Motor Corp.'s partner in China, said it will report a loss for 2001, down from its earlier forecast of a drop in profit, because an oversupply of cars forced it to cut prices, AAO wrote. Profits of 15 key automakers in China totaled US$116 million during the first two months of 2002, nearly 22 percent lower compared to last year, the State Economic and Trade Commission (SETC) wrote in a report. Local carmakers, such as Tianjin Automotive Industry Corp and Shanghai General Motors (GM) and First Automotive Works (FAW), have conducted more than 10 price cuts starting from the end of last year, China Daily wrote. Next month is expected to have a big auto imports wave; in the first two months of the year China imported 9500 vehicles. However, some carmakers, such as Shanghai GM and the Changchun-based FAW, said their profits were not affected by their price cuts thanks to their robust growth in sales. Shanghai GM said its sales during the first quarter increased to 2.65 billion yuan (US$320.4 million) from 1.65 billion yuan (US$199.5 million) in the same period of last year. The demand for cars in China will continue to grow in the years ahead. Beijing is set to review its auto industry policy later this year and might ease restrictions on foreign joint ventures AAO reported. 
Chinabiz News
Suzuki JV fires latest salvo in the China car price war
The China venture of Japan's Suzuki Motor Corp said on Friday it slashed prices of all its 19 products by up to 20 percent, joining a resurgent price war due to pressure from cheaper imports. Chongqing Changan Suzuki Automobile Co ordered a nationwide price reduction for its entire Alto and Lingyang small car series starting Friday, with the biggest cut of 20,000 yuan ($2,417) for the one-litre engine Lingyang, a spokesman for the venture said.
"The cut is steep and large-scale, and will return a large part of our profits to buyers. As a result, our company will, in principle, not cut prices again for the rest of this year,'' the spokesman said. The venture, 51 percent-owned by Shenzhen-listed Chongqing Changan Automobile Co , has an annual capacity of 150,000 cars. The listed firm's hard currency B shares available to foreigners closed unchanged at HK$2.67 on Friday, unaffected by news of the price cut, brokers said. Several Chinese auto makers have trimmed prices this year to fend off intensifying competition from a surge in cheaper imports expected to hit sales of locally-made cars. Analysts said China's car sales are likely to jump seven to 10 percent to 750,000 to 800,000 units in 2002, including more purchases of imported cars, from around 700,000 units for 2001. The government cut tariffs on car imports by about one third to 40 percent to 50 percent this year to honour its commitments to the WTO, of which it formally became a member on December 11. In a WTO agreement with the United States late in 1999, China promised to cut tariffs of imported sedan cars to 25 percent five years after joining the trade body.
LED BY GIANTS
First Automotive Works (FAW), China's leading auto group, last week cut car prices by an average of 30,000 yuan ($3,625). Prices for four models of FAW's Red Flag cars had been cut to 219,000 yuan to 319,800 yuan each. Tianjin Automotive Xiali Co cut the price of one of its key compact car models by nearly 20 percent. Prices for cars made by Hainan Mazdas Auto had also been slashed by about 10,000 yuan to 20,000 yuan each.
A report by the official Xinhua news agency said on Thursday daily sales of Tianjin Auto soared nine times after its price cut, adding that the latest price cuts by big names would help car makers clean out excess stocks. China's auto industry has been plagued by raging price wars between dozens of tiny domestic producers. All China's vehicle makers are licenced but at least one-third are not making sedan cars at all, and only a handful have an annual capacity of more than 10,000 units, analysts said.
Auto makers are also scrambling to put out new models this year to win a slice of the fast-growing but crowded car market. Volkswagen 's Shanghai venture, which holds 40 percent of China's passenger car market, plans to launch its Polo hatchback in the country in April. Honda Motor also plans to roll out subcompacts in 2003. General Motors (NYSE:GM - news)'s Shanghai joint venture launched the Buick Sail family car last May and grabbed a 20 percent share of the market, the U.S. firm has said.
Auto sales to leap next year
China's automobile market is forecast to have a total volume of up to 3 million units next year. According to Xu Changming, an industry expert from the State Information Centre, the forecast is based on an anticipated surge in auto imports stemming from sharp tariff cuts next year and on a continuous rise in the sales of domestic manufacturers as they are expected to decrease prices and are likely to launch more new models on the market. Xu said over the weekend that auto imports in 2002 would reach 200,000 units as China would slash its tariffs from the current level of 70-80 per cent to 43.8-50.7 per cent at the beginning of the year, the biggest cut after the nation's entry into the World Trade Organization (WTO). "The robust imports next year are expected to ignite a long-term and sustainable growth of the domestic auto market," Xu said.
Jia Xinguang, an analyst from the China Automotive Industry Development Research Institute, even predicted the imports in 2002 would amount to 300,000 units. China Trading Centre for Automobile Imports said imports during the first 10 months of this year nearly doubled to 64,600 units from the same period of 2000. Ding Hongxiang, the centre's deputy general manager, said the total imports would increase to 70,000 units this year from 42,000 in 2000. Ding attributed the increase largely to tariff cuts from 80-100 per cent to 70-80 per cent at the beginning of this year. Xu said sales of domestic automakers were expected to maintain a double-digital growth next year because they would further decrease prices and offer more new models to compete with increasing imports.
"The sales in 2002 are expected to jump up to 2.7 million units," Xu told China Daily. He said the total sales this year would reach 2.4 million units. China Association of Automobile Manufacturers said sales increased by 15.8 per cent year-on-year to 2.15 million units from January to November in 2001. Xu estimated that the prices of domestically made autos would on average decrease by 15 per cent next year. Signs indicate that many automakers in China will cheapen the price of their products next year. Shanghai Volkswagen -- a joint venture between Shanghai Automotive Industry Corp and German carmaker Volkswagen AG -- for example, has announced it will continue to take measures to cut the price of its products next year. The company already decreased the price of its old Santana car to 105,000 yuan (US$12,700) from 150,200 yuan (US$18,400) in 1995.
The Wuhan-based Dongfeng Citroen, cut the price of its 1.4-litre Fukang car to less than 100,000 yuan (US$12,000) for the first time last month. The new models to be launched on the market next year by domestic automakers include Polo compact car of Shanghai Volkswagen, Palio of the Nanjing-based Yuejin Fiat Co and Guangzhou Honda's Odyssey multi-purpose vehicle, which were on display at the recent Shanghai International Motor Show. However, Su Hui, general manager of the Beijing Asian Games Village Automobile Exchange, said he was not "very optimistic" for the auto market next year because many consumers would continue to postpone buying cars in expectation of cheaper prices after the WTO entry. China will decrease tariffs to 25 per cent by mid 2006, according to the WTO requirements.
China Daily News
Car-rental giants ride into China
Avis, Hertz and a number of other foreign car-rental companies are moving forward with plans to tap China's potentially huge market, as the country further opens its auto service sector following its accession into the World Trade Organization. Avis Rent A Car System Inc., the world's second-largest general-use car-rental company, signed an agreement with Shanghai Angel Car Rental Co. to set up a 50-50 auto-leasing joint venture yesterday. The sluggish global auto industry and the economic slump in the United States have forced Avis to branch out into emerging market such as China, industry officials say.
The Shanghai venture, which is the company's first foothold in China, is expected to bolster Avis' expansion in the Asia-Pacific market, said company officials. Shanghai Angel, a subsidiary of Shanghai Automotive Industry Group, is the city's largest auto-rental company, with a network spanning more than 20 locations nationwide. As part of its development strategy, Shanghai Angel said it aims to learn advanced management and marketing techniques from its U.S. partner to upgrade its operations. Meanwhile, Avis' global rival, Hertz Rent A Car Corp., the world's largest car-rental company, has also been trying to enter the promising Chinese market. Hertz on Tuesday announced the appointment of China National Auto Anhua Car Rental Co. Ltd. as its international licensee for China. Hertz and China National Automotive Industry Corp. signed an authorized franchise agreement in 2000, but the licensee didn't begin operations until late last year, said Zhang Yicun, general manager of the newly launched car-rental company. The company has begun to provide rental services in Beijing and will kick off its operation in Shanghai and Guangzhou soon, said Zhang. However, as the cooperation is confined to brand dealerships and lacks a closer link forged by strong capital input, Hertz's expansion in China will be limited to some extent, said industry observers.
As the Chinese government allows foreign investors into the auto service sector, the country's huge market potential will present a greater temptation for foreign car-rental companies, industry observers said. But foreign investors may be challenged by the high investment risks in the domestic rental market due to China's undeveloped credit rating system and unfavorable transportation management environment, they noted. Most domestic car-rental companies are quite small compared with their overseas counterparts, said Hong Jiankang, general manager of Shanghai Zhenlang Trans-portation Equipment Leasing Co. Ltd. Currently, about 3,000 domestic car-rental companies own only 40,000 cars, while Hertz alone has 520,000 cars worldwide. The expansion of foreign companies should propel development of the domestic car-rental industry, said Hong, noting that local companies need to provide better service to match foreign competition.
Chinabiz News
FAW Volkswagen to produce 171,000 vehicles in 2002
FAW Volkswagen, a 50-50 joint venture between China's First Automotive Works and German auto giant Volkswagen AG, plans to manufacture another 500,000 passenger cars over the next three years, according to a high-ranking executive of the company. Peter Wolters, vice-president of FAW Volkswagen, said the company made the ambitious plan based on an expected consecutive increase in its annual production in coming years "The plan could be achieved in a shorter period of time, maybe two and half years," Wolters said in an interview with China Daily last Friday. The plan came after total sales of the joint venture reached 500,000 units over a period of 10 years.
Qin Huanming, president of FAW Volkswagen, said the company's production would continue to focus on A- and C-class passenger cars. The Changchun-based company, aimed to produce around 171,000 vehicles this year, including 92,000 Jetta, 29,500 Audi A6 and 50,000 newly launched Bora sedans, Qin said. The company sold 124,000 vehicles last year, an increase of 17 per cent over that of 2000, he said. FAW Volkswagen has announced it will begin to produce the diesel-engine Jetta in March. The model, which mainly targets taxi companies, will be the first diesel sedan to be made in China. The company will also start to manufacture the 1.6-litre Bora in June. By the end of January, sales of the 1.8-litre Bora, which was launched on the market last December, amounted to 4,000 units.
Wolters said FAW Volkswagen had no plans to cut the price of its products in the near future. "We are committed to upgrading the technical performance of our products, instead of cutting prices, to lure consumers," Wolters said. FAW Volkswagen is seen as one of the few hard-liners in an ongoing price war currently taking place in the domestic car market. Many carmakers, such as Shanghai Volkswagen - the other car joint venture of Volkswagen AG in China, Shanghai General Motors and Tianjin Automotive Industry Group, have lowered the prices of their products in a struggle for market shares amid an expected jump in auto imports, as a result of China's sharp tariff cut. The most aggressive action so far this year has been made by Shanghai General Motors, which devalued its 2.5-litre Buick sedans by 30,000 yuan (US$3,610) on Jauary 31. On January 1, China decreased its tariffs on auto imports to 43.7-50.7 per cent from 70-80 per cent, the biggest cut after the nation's entry into the World Trade Organization in December.
Chinabiz news
BMW Gets China's Approval for Mainland
Car-Manufacturing Venture
HONG KONG -- Bayerische Motoren Werke AG has received the Chinese government's approval to set up a car-manufacturing joint venture in China , analysts said Thursday. The German car manufacturer, better known as BMW, began talks with mainland minibus maker Brilliance China Automotive (NYSE: CBA - News) Holdings Ltd. in late 2000, to jointly manufacture BMW luxury cars. If successful, BMW will become the first foreign luxury car maker to produce automobiles on the mainland. Two analysts told Dow Jones Newswires that executives from BMW's Beijing office said the car maker has received a project proposal permit from the Chinese government for their plan to produce "Made in China " BMWs for sale on the mainland. "The project proposal permit is the first and the most difficult permit to get, said one analyst. The project proposal permit allows BMW and Brilliance China to set up a joint venture. BMW still has to get a feasibility study permit, a contract permit and a production permit before actual production can begin, said the analyst. BMW wasn't immediately able to comment, said its regional corporate affairs manager. Brilliance China couldn't immediately be reached for comment. Analysts said they were told by Brilliance China 's management Wednesday that BMW expects to control a 50% stake in the joint venture. Brilliance China will take a 40% stake and the remaining stake will be held by the government. The minibus maker's management also said the company expects to receive a production permit by the end of this year and hopes to start production in the fourth quarter of 2003. The joint venture would produce a few thousand BMW 3 series vehicles initially. Production would rise to 16,000 in 2004 when it starts to manufacture BMW 5 series vehicles.
The initial production capacity is 20,000 units annually and it hopes to expand to 40,000 units. Analysts said the news is generally positive for Brilliance China , which has seen its share price fall nearly 17% in June following media reports that its former Chairman Yang Rong and other senior executives were under investigation for asset-stripping. Although the company had said Wednesday that Yang wasn't under investigation, it announced Thursday morning it was replacing Yang. Vice Chairman and Chief Financial Officer Wu Xiao An has been appointed chairman, while Su Qiang is the new president and chief executive. He Tao was named chief financial officer.
Chinabiz News
A shipment of 252 Xiali economy cars manufactured in north China's port
city of Tianjin is on its way to the United States market.
Tianjin is the leading manufacturing center for economy cars in China. The cars, produced by Tianjin Auto Group in cooperation with Toyota, are the first batch of Chinese-made economy cars to be exported. They are part of a deal signed in April between the manufacturer and American Automobile Network Holdings Inc.,
which will be the sole agent for Xiali economy cars on the international market. According to the deal, the American company will be responsible for selling at least 25,000 Xiali cars during the next five years. A spokesperson for the American company said Monday the stability, reliablility and fuel efficiency of the Xiali compact car, which will sell for 10,000 US dollars, will make it competitive on the American new car market. Auto experts say China has the capacity to produce all types of motor vehicles, but the medium and high-grade car market is still dominated by foreign brands.
Chinabiz News
VW to offer cheap model
Competition in the Chinese low-price car market will heat up as German auto giant Volkswagen Group has announced it plans to manufacture a new model at a price of less than 100,000 yuan (US$12,000) in China by the end of this year. Michael Wilkes, a spokesman for Volkswagen's China operation, said yesterday that the company will produce the model in the Shanghai Volkswagen plant, a joint venture with Shanghai Automotive Industry Corp (SAIC) - one of the nation's top three domestic automakers. It will be the first time for Volkswagen Group, which commands more than 50 per cent of the Chinese passenger car market, to launch a model priced below 100,000 yuan in China. "The market segment is growing very strong. We are watching closely and we want to be part of the growing segment," Wilkes told China Daily. But the design of the new model has not yet been decided. Analysts predict the model will possibly be a redesigned Volkswagen Golf. Jia Xinguang from the China National Automotive Industry Consulting and Development Corp, said that cars selling for less than 100,000 yuan (US$12,000) will make up one of the fastest-growing market segments in China in coming years. According to statistics of the China Association of Automobile Manufacturers, sales of such Chinese-made cars during the first five months of this year were 70 per cent higher than in the same period last year. "I think Volkswagen also hopes to change its image as a producer of medium and up-market cars in China and to appeal more to average local consumers through the launch of this lower priced model," Jia said in an interview with China Daily.
Currently, the company produces its Polo, Santana and Passat in Shanghai Volkswagen, and Jetta, Audi A6 and Bora in FAW Volkswagen, a joint venture with the First Automotive Works Corp based in Northeast China's Jilin Province. The Audi A6 is the most expensive foreign car made in China so far. Many foreign automakers have begun producing cheap cars in China to cash in on the market segment. General Motors, the world's No 1 automaker, makes the 1.6-litre Sail compact car in Shanghai GM, its joint venture with SAIC. Italy's Fiat Auto manufactures its Palio in East China's Jiangsu Province. The competition in the segment is also fuelled by cheaper cars produced by some local manufacturers, includin Geely Group - a privately owned Chinese carmaker in East China's Zhejiang Province and Tianjin Automotive Industry Corp, which provide cars priced at 30,000-50,000 yuan (US$3,600-6,000).
Chinabiz News
China To Buy EUR48 Million in Mercedes Benz Vehicles From Egypt
China will purchase EUR48 million worth of Mercedes Benz vehicles from Egypt this year, state media reported. Under the purchase agreement, China National Arts, Crafts Import/Export Corp. will buy a total of 50 E240 Mercedes Benz models from the Egyptian-German Automotive Co . by the end of 2002, the official Xinhua News Agency reported late Thursday. The report said China has also signed a letter of intent committing it to a purchase of an additional 1000 E240 models from the Egyptian company in 2003. The purchase deals were designed to boost Egypt 's entry into China 's auto market as well as to promote trade between the two countries, the report said. Trade volume between China and Egypt increased 6% year-on-year to $950 million in 2001, the report added.
Chinabiz News
Slicing up the domestic car market
Beijing - State-owned enterprises, local governments, listed companies and other private investors are all rushing to get their share of the domestic car market, which seems to grow faster than expected, says Business Weekly on Tuesday. There are already around 120 companies producing cars in China and new foreign competitors are rushing to the market. Statistics in the industry show that vehicle production will increase to 10 million units a year by 2005, if the current development continues. But the domestic demand is expected to be 5 million units, and that's the most optimistic estimate. That leaves a 5 million unit gap between industry offerings and market demand. "Many are gambling in the industry, and their money will be burnt soon," Jia Xinguang, chief analyst with the China National Automotive Industry Consulting and Development Corp, was quoted in Business Weekly. He says manufacturing should be properly controlled. If not, many car production companies will go bankrupt or be taken over by big rivals, as competition will increase, also due to China's membership of the WTO. But there are others of different opinion.
"The priority task is to freeze the government's new administrative investment and the government-controlled input of State-owned enterprises into the automotive industry", Liu Shijin, expert from the Development Research Centre under the State Council, was quoted. So far, state investment still dominates the industry. Liu says that in a market-driven economy the government should not take administrative measures to prevent redundant production. Instead, the industry should be opened wider to non-state investment to increase market competition.
Su Bo, an official from the State Economic and Trade Commission, said earlier that the fund raising system of the industry will be speeded up to encourage foreign and domestic private investors to enter, and State investment to decrease.
Last month, the Nissan Motor Co from Japan, announced that it will invest 8.55 billion Renminbi (US$1.03 billion) to set up a joint venture with the Dongfeng Motor Corporation. In August the Toyota Motor Corp., also from Japan, signed a co-operation agreement with the Chinese First Automotive Works Corp.
The Geely Group, a privately owned Chinese car maker, has announced a plan to increase its annual production to 2 million units by 2015, and is building a 300,000-unit manufacturing base in East China's Zhejiang Province. China Brilliance Auto, another privately owned car maker, announced it's aim to increase annual sales up to 450,000 units within the next ten years. In the first eight months of this year, sales of vehicles made in China increased to 2.08 million units. Sales forecasts exceed 3 million units for the whole of this year. Some of the foreign car producers do not fear the gloomy market. "At home they get upset when I do not have enough production capacity," one of them said. "That would be worse than having over capacity."
Chinabiz News
Automaker expands overseas
Shanghai Automotive Industry Corp. plans to buy 10 percent of a South Korean venture owned by General Motors Corp. and Daewoo Motor Co., in a move aimed at positioning itself as a player in the global market, company officials announced yesterday. China's leading carmaker will unveil details of the investment on Sunday at a press conference in Shanghai, to be hosted by Shanghai Automotive President Hu Maoyuan and GM China Group Chairman Phil Murtaugh. The plan would make Shanghai Automotive, which partners with both GM and Volkswagen AG in making passenger cars in China, the first Chinese carmaker to expand abroad. The expansion comes as part of the company's aggressive plan to eventually be among the world's auto giants with the help of its two overseas partners, said industry observers.
Company President Hu Maoyuan said last month that he expects sales to triple to 1 million vehicles in the next five years. "Our aim is to produce 50,000 cars under our own brand names by 2007," Hu said. The company only began producing its own brand-name vehicles in July when the first Sabre, a light passenger car that can also function as a minivan for hauling goods, began rolling off the assembly line at SAIC's new factory in neighboring Jiangsu Province. The company has spent 350 million yuan (US$42.17 million) to build a new factory for SAIC Yizheng Automotive Co. Ltd., its wholly owned subsidiary in Yizheng of Jiangsu Province, said Hu. The company now sells about 300,000 cars annually, which are built by its joint ventures with its two foreign partners. The cars include VW's Santana, Passat and Polo and GM's Buick. Industry officials said General Motors Corp. is also mulling over the idea of building a model produced by Daweoo Motor Co. at its US$1.5-billion venture with Shanghai Automotive in Pudong District.
In April, General Motors said it would lead its partners in buying some of Daewoo Motor's assets for US$1.17 billion in cash and assumed debt. The Detroit-based firm said in June that it would invest US$251 million in cash for 42.1 percent of GM-Daewoo, leaving its partners to pay about US$149 million for 24.9 percent of the venture. Daewoo's creditors, led by Korea Development Bank, will own 33 percent of the new company. China carmaker joins GM in Daewoo venture (October 13,2002 )(Agencies) China's third largest auto firm, Shanghai Automotive Industry Corp. Group, has joined General Motors in a joint venture with South Korea's Daewoo Motor Co., the first Chinese auto maker to invest in a foreign one. SAIC said on Sunday it would spend $59.7 million on a 10 percent stake in GM Daewoo Auto and Technology Co, which will own three of the bankrupt South Korean firm's manufacturing plants. The partnership would help Daewoo enter the fast-growing China market -- its strength in subcompact cars production complementing the Buick sedans and family cars that GM and SAIC roll out at a Shanghai joint-venture plant. For SAIC, one of the top three state-owned auto makers which the Chinese government wants to turn into globally competitive producers, the investment was unlikely to yield quick returns but could give it experience in overseas markets, analysts said. "SAIC's equity participation in GM Daewoo is part of our 'Go Abroad' strategy," SAIC president Hu Maoyuan said in a statement. "It is an important first step for the participation of China's developing automotive industry in the international market." General Motors Corp, the world's largest auto maker, agreed in April to take 42.1 percent of the $597 million Daewoo venture to be launched this month.
Japan's Suzuki Motor Corp will take 14.9 percent and Daewoo creditors 33 percent. GM Daewoo will have the capacity to build 800,000 automobiles worldwide with plants in South Korea and Vietnam. CHINA FOCUS Daewoo Motor exports small cars to China, one of the world's fastest growing auto markets and a strategic focus of most global producers. Steady economic growth is expected to push car sales to one million in China this year, up 40 percent. Daewoo's cars are popular with Chinese because of their relatively low price, but to expand in the increasingly competitive market, foreign car makers need local operations to take advantage of lower production costs. "SAIC will help GM Daewoo participate more fully in China's rapidly growing vehicle market," GM Daewoo president and CEO Nick Reilly said in the statement. He did not elaborate. SAIC is China's largest passenger car maker and makes sedans with both GM and Germany's Volkswagen AG. It sold more than 319,000 vehicles last year and earned $881.9 million in profits. It aims to produce one million vehicles by 2007. Analysts said SAIC, which will have representation on GM Daewoo's board of directors, could use Daewoo to learn about overseas markets and perhaps supply components to them. "I would imagine the investment they have there is mainly to gain a window into operations at other firms. Secondly, they may try to use that to supply some parts produced in China," said Xin Xie, senior economist at Bank of America, last week.
Chinabiz News
China set for all-clear on auto financing
By Richard McGregor in ShanghaiFinancial Times; Dec 12, 2002 China's fast-growing car market will get a boost with the passing within months of regulations approving the establishment of local and foreign auto financing firms.Long Yongtu, a vice-minister in the Ministry of Foreign Trade and Economic Co-operation, was quoted in yesterday's Shanghai Daily as saying that the regulations would be in place "early next year".This accords with indications to China-based executives of foreign car companies that the long-awaited approval from the People's Bank of China (PBOC), the central bank, for car financing, was imminent.Phil Murtaugh, chairman of General Motors in China, said in a recent interview that the approval of car financing would have a "positive effect on sales".China's passenger car sales will total about 1.1m vehicles this year, an increase on 2001 of more than 50 per cent - a rate of growth that has surprised even the car companies themselves.Both Volkswagen, the market leader, and GM are preparing to reinvest in their China plants in an effort to lift capacity to meet the growing demand.Mr Murtaugh said he expected the market to grow by 10-20 per cent next year without financing and, "with financing, significantly more than that".A short three-month experiment with auto financing in 1999 saw sales during that period increase by 60-70 per cent, he said.Chinese banks, which have been allowed to do auto financing since 1998, made car loans worth Rmb50bn ($6bn) in the first nine months of this year, up more than 170 per cent from the same period in 2001.Volkswagen, GM and Ford have all applied, either as stand-alone entities or in the form of joint ventures, for auto financing licences.China agreed, as part of its entry into the World Trade Organisation (WTO), to allow foreign firms to do car financing and released draft regulations in October.The comments by Mr Long, who negotiated China's WTO accession, is the first official confirmation that the approval from the PBOC will come soon.However, foreign motor companies have expressed concern about a number of requirements in the regulations - that firms will need Rmb8bn in assets and a minimum registered capital of Rmb500m."These are issues for discussion," said a spokesman for Volkswagen yesterday.In future moves to open up the market signalled by China, average import duties on cars will be cut by nearly a half, to 25 per cent, by July 1 2006.Import quotas on vehicles will rise by 15 per cent each year until all limits are abolished by 2005. China will also lift restrictions on the category and model of vehicles produced by Sino-European Union ventures by the end of 2003.
China Bize News
GM's Murtaugh says China-brand car-makers may face problems in long term
SHANGHAI (AFX-ASIA) - Chinese-brand passenger cars are likely to be a strong force on the domestic market in the near term, but the companies that make these cars are likely to run into problems over the longer term as they have less scope for product development than more established manufacturers, Phil Murtaugh, chairman and CEO of General Motors Corp in China said. The most successful Chinese-brand cars have been the Geely and the Chery, both of which have been developed using technology taken from other companies' products, Murtaugh said. According to a report recently published by Automotive Resources Asia, the Geely, built by privately-owned Geely Group, uses the same chassis as an older Charade produced by Tianjin Xiali under licence from Daihatsu Motor Co Ltd.
The Chery is assembled from a SEAT production line imported from Spain. Because the cost of developing these cars has been low, the firms have quickly increased their market share. ARA said Chinese-brand passenger cars such as these took a 15-pct share of the domestic car market during the first half, up from 5 pct a year earlier. "(These companies) have been very successful dealing with products that have been developed off existing products," Murtaugh told reporters. "From a market-entry point of view, that's a good strategy that gives them a lot of competitiveness, and they will be a factor I think in the short term. "In the long term, they have no ability for product development, and my guess is that they will run into problems after a few years," he said. While some firms have taken action to stop breach of copyright by Chinese car manufacturers, Murtaugh said no Chinese firms have copied any of GM's products. "If they copy our technology, we will pursue them," he said. In June, Volkswagen AG's head of Asia-Pacific operations, Bernd Leissner told reporters that VW took steps to prevent the use of VW auto parts in the manufacture of the Chery. Honda Motor Co also took legal action earlier this year to reclaim a motor-scooter patent it claimed was stolen by three Chinese firms.
China Bize News
General Motors, Partner May Take Over China Automaker (Update1)
By Eugene Tang and Jiang Jianguo
Yantai, China, Dec. 6 (Bloomberg) -- General Motors Corp. and China's largest carmaker plan to buy state-owned Yantai Body Co., which would give the world's biggest automaker its fourth manufacturing plant in China.
"We are in talks with Yantai Body," said Daphne Zheng, a spokeswoman for General Motors China Group. ``The rapid expansion of China's automotive industry has created new opportunities."
General Motors and partner Shanghai Automotive Industry Corp. may pay 900 million yuan ($108 million) to buy the maker of Lanos passenger cars, said a Shandong province official who declined to be identified. The provincial government owns the company, which is located in the eastern port of Yantai.
General Motors, Volkswagen AG and other foreign automakers are piling into China to take advantage of the world's fastest- growing auto market. Cars sales in China rose by half in the first 10 months of the year, as rising urban incomes and the introduction of credit financing put automobiles within the reach of more families.
General Motors predicts China will be the world's third- largest market in six years, behind the U.S. and Japan.
The two companies will sign an agreement with the provincial government by Dec. 20 to buy Yantai Body, the government official said. The accord will give each partner a quarter stake, with the remainder to be held by a venture both own, the official said.
Capacity
Yantai Body was established in 2001, with an initial annual production capacity of about 50,000 vehicles, said company official Tang Weidong.
General Motors now makes Buick sedans and wagons and Sail cars in Shanghai in a $1.5 billion venture with Shanghai Auto. General Motors has a separate venture in the northeastern Chinese city of Shenyang, making Blazer sports-utility vehicles and pickup trucks. General Motors also owns 34 percent of SAIC Wuling Automobile Co. in southern China, which makes minivans and trucks.
Volkswagen this week raised its sales forecast for cars made in China to 500,000 and said China will surpass the U.S. this year as its biggest market after Germany. Volkswagen said it will manufacture two new low-cost compact models in China next year.
China Motor Co., Taiwan's largest vehicle maker, said this week it's received approval from China to make sedans at its venture with Southeast Motor Co. in China. China Bize News
China Bize News
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