China automakers buy into Europe car companies

PARIS: Chinese automakers have returned in force to Europe, buying up brands and plants after early efforts to get a foothold in one of the world’s largest car markets failed.

Great Wall Motor is the latest China entrant, with production at its plant in Bulgaria due to start tomorrow, giving it access to the European market of some 500 million people with a very competitive line up which may give Europe’s established firms pause for thought.

Prices for its base Voleex C10 model, the Steed 5 pick-up and Hoover H5 four-by-four run from just 8,000 euros to 14,700 euros and the company, which has 10 sites in China, said it was aiming for production of 500,000 vehicles overseas by 2015.

Analysts said it may be surprising that Chinese firms seem so determined to get into Europe, a saturated market where car sales were declining, but there were benefits for them, especially in terms of branding and prestige.

“It is a way for them to make progress in quality levels,” said Yann Lacroix, analyst at Euler Hermes in Paris.

In Britain, Geely Motors plans to start selling a mid-range sedan by the end of the year at a very competitive £10,000.

Announcing the move in December, the company, which owns Sweden’s Volvo Cars, said “the leaps and bounds made in manufacturing mean that China’s car makers are rapidly closely the gap with Europe’s establishment.

“We will be aiming to widen our range just as quickly as possible, probably at least a new model range every year for the next four to five years.”

Reflecting the growing global ambitions of Chinese automakers, Geely bought Volvo from US auto giant Ford for Us$1.5bil in 2010, less than a quarter of what Ford paid for the company in 1999.

“In that way, the company made a very significant technological jump,” Lacroix noted.

Meanwhile, China’s largest homegrown carmaker Chery Automobile has established its base in Italy with local company DR Motor and at the end of last year bought a Fiat plant at Termini Imerese in Sicily.

Chery is developing its own marque for Europe, Qoros, in cooperation with an Israeli company which should make its first model next year.