The Year That Got Away: China's Auto Makers Way Off Target
With the end of the (Western) year in sight, Chinese auto makers look in their books, roll their eyes, and sigh. One by one they come to the same conclusion: this year’s targets are toast. Bu hao, no good. According to a tally by Gasgoo, five Chinese auto makers have officially written off their old targets and revised them way down: Changan Mazda (-50 percent); Dongfeng Yueda Kia (-20 percent); Dongfeng Peugeot (-31 percent); Dongfeng Citroen (-27percent); FAW-VW’s Magotan (-22 percent). This doesn’t mean that their year-on-year sales will be down by that much. They probably started the year with optimistic growth rates. Which are now coming home to rust. Other companies don’t want to throw in the towel yet, or they say it’s too early to call. But ending October, most of China’s big auto makers were way off course.
The worst off: Changan Ford Mazda. The automaker had fulfilled their plan by just 56 percent. Fugedaboutit. The best: Donfeng Nissan, fulfilling 81 percent of plan. Mmmmaybe. SAIC-GM-Wuling: 78 percent. Nah. FAW-VW: 71 percent. Nein. Shanghai VW 68.5 percent. Oh nein. Shanghai GM: 61 percent. Don’t even think it.
Faceless experts cited by Gasgoo voice the not all too surprising opinion that with those uninspiring October results, it’s impossible for the carmakers to achieve their full-year targets. A slight sales growth compared to 2007 is as good as it’s going to get. Others may just post flat sales. Or, unheard of in China, numbers going down. So much for the Chinese market bailing out the big boys.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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It's 2008, take off those 1978 glasses, China looks different now days. Been to the new Beijing airport? It's a world class airport that any major city would be proud to have, and it wasn't built by peasant slaves with hand tools, ok? Yes, technically, China can still nationalize any damn thing it wants to inside its borders. And, yes their government has some of the most ruthless, selfish, bastages around. But even a two digit IQ bureaucrat knows it's a dumb thing to kill the goose in order to get the egg a day sooner. I'm sick of hearing these stereotypes about China on TTAC, where I see so much other smart commentary. But when it comes to China, it's completely over taken by a "OMAGAWD they are commies" mentality.
Who cares about their targets? Exactly how do the sales numbers compare to those from last year?
I'll let the others argue the finer points of running a business in China. I just wanted to say thanks for the pic. I'm really getting tired of the ugly old men who shouldn't be running a lemonaid stand let alone a major auto manufacturer, so this was a welcome respite.
@pf21: As of October, actual sales were still 11 percent above prior year. However, sales are slowing significantly. October sales were only 3.3 percent above October 2007. The last three months of the year are a big selling season in China. Guesstimates for end-of-year are anywhere between 5 and 8 percent growth. Next year could be ugly. Once China recovers from the shock (and they are already pushing the stimulus pedal) their car market is set to boom. As said many times: USA has 750 cars per 1000 pop. China has maybe 20 real CARS per 1000 pop (you'll see different numbers, all confused.) @zoomzoom: That's one of the many reasons that after my first visit to China, I decided to stay.