Los­ing speed

China Daily (Hong Kong) - - FRONT PAGE - By LI FANGFANG li­fang­fang@chi­nadaily.com.cn

Chi­nese car­mak­ers’ mar­ket share con­tin­ues to fall in July de­spite a 10.5 per­cent growth in pas­sen­ger ve­hi­cle sales.

The mar­ket share of do­mes­tic-brand four-door ve­hi­cles hit its low­est point in at least five years in July, even as China’s over­all ve­hi­cle pro­duc­tion and sales main­tained sta­ble gains.

An­a­lysts said that do­mes­tic brands face in­creas­ing pres­sure from their for­eign ri­vals, be­cause the govern­ment is un­likely to an­nounce any poli­cies that would fa­vor the na­tion’s ve­hi­cle mak­ers.

“The tough sit­u­a­tion that do­mes­tic au­tomak­ers now face can be com­pared with that in 2008, be­fore the fi­nan­cial cri­sis en­gulfed the world,” said Dong Yang, deputy chief of the China As­so­ci­a­tion of Au­to­mo­bile Man­u­fac­tur­ers.

Do­mes­tic brands got a life­line dur­ing the global down­turn from govern­ment sub­si­dies for ru­ral buy­ers and lower con­sump­tion taxes on cars with smaller engine dis­place­ments, Dong said.

How­ever, “their com­pet­i­tive­ness did not im­prove. Thus, their po­si­tion in China’s au­to­mo­bile mar­ket is now even lower.”

He said do­mes­tic brands had also lost mar­ket share as for­eign pro­duc­ers and joint ven­tures moved into all seg­ments, es­pe­cially in the com­pact and smaller car mar­kets, which were dom­i­nated by Chi­nese brands in years past.

“If they don’t make huge ef­forts to im­prove the qual­ity of their prod­ucts and im­prove their rep­u­ta­tion, do­mes­tic brands will con­tinue to ex­pe­ri­ence weak de­mand be­cause the govern­ment won’t launch any sup­port poli­cies in the short term,” said Dong.

In July, the to­tal sedan sales of do­mes­tic brands de­clined 15.74 per­cent month- on­month to 195,800 units, al­though sales did rise 2.68 per­cent year-on-year.

The do­mes­tic brands’ com­bined share of 23.3 per­cent in China’s sedan sec­tor was 1.24 per­cent­age points less than in June and 0.97 per­cent­age point lower than a year ear­lier, the weak­est show­ing in at least five years, said CAAM on Fri­day.

Ger­man-brand sedan sales reached 223,500 units in July, main­tain­ing lead­er­ship in the sec­tor for a sec­ond con­sec­u­tive month with a com­bined mar­ket share of 26.6 per­cent.

Dong said the lux­ury car seg­ment would grow faster than the over­all mar­ket in the long term, mean­ing more op­por­tu­ni­ties for for­eign brands in the world’s largest auto mar­ket.

In July, Ger­man lux­ury car brand Audi’s sales in China surged 27 per­cent to 42,000 units, much faster than its global growth, which was less than 10 per­cent.

CAAM said that in July, to­tal pas­sen­ger ve­hi­cle sales main­tained year-on-year growth of more than 10 per­cent, with to­tal de­liv­er­ies of 1.24 mil­lion units.

The sport util­ity ve­hi­cle and multi- pur­pose ve­hi­cle seg­ments re­mained the fastest-grow­ing seg­ments, with ex­pan­sion rates of 93.5 per­cent and 45 per­cent.

“Growth of about 10 per­cent is healthy and rea­son­able … good for the in­dus­try,” said Dong.

“Al­though in­creas­ing new ve­hi­cle sales cre­ate more traf­fic pres­sure in the cities, we can­not agree with sim­ple curbs some lo­cal govern­ment im­pose to limit the num­ber of ve­hi­cles on the road.”

Dong sug­gested that ad­just­ing taxes on ve­hi­cle pur­chases on use would be an al­ter­na­tive.

PRO­VIDED TO CHINA DAILY

Do­mes­tic brands face in­creas­ing pres­sure from their for­eign ri­vals, be­cause the govern­ment is un­likely to an­nounce any poli­cies that would fa­vor the na­tion’s ve­hi­cle mak­ers, ac­cord­ing to an­a­lysts.

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