China may be the world’s largest auto market until further notice. Its much feared auto exports however are nothing to write home about. In fact, China’s already measly car exports have declined for 14 consecutive months since August 2008. For the first half of this year, China exported only 191,000 units. This in a market that is expected to be good for 12m units domestically. Other countries, such as Germany and Japan, typically export the same number of cars they consume at home. A good deal of the few vehicles that are exported from China are commercial and utility vehicles, sold to underdeveloped markets.
Two months ago, Zhao Hang, President of the China Automotive Technology and Research Center, blamed quality and after-sale service problems for the underwhelming performance. He also said that Chinese auto exporters lack knowledge of overseas demand, government policies, regulations and certification.
The Chinese government can’t stand it any longer.
Beijing has issued fresh guidelines for the country’s exports of vehicles and auto parts. In 10 years, the Chinese government wants to see a 10 percent market share of vehicles and parts sold worldwide, Gasgoo reports.
In a joint statement, China’s Commerce Ministry and several other government agencies said that they expect Chinese companies to achieve $85 billion worth of auto and auto-parts exports by 2015, at an annual growth rate of 20 percent.
Chinese carmakers are told to penetrate higher market segments in developing countries, set up well-developed sales networks and offer better after-sales services there. They are also encouraged to transfer auto technology from overseas and invest more in the auto sectors of other countries.
This is the first time the Chinese automotive industry has received marching orders as clear as these. While the growth targets are achievable in the parts sector, they are highly ambitious for whole cars. This year, worldwide output will be approximately 60m vehicles. 10 percent worldwide market share today would mean that China exports some 5m vehicles. Reaching these goals would need massive intervention. Typically, China’s government “guidelines” are followed by a helping hand lent by the government to the mostly government-owned car companies.
It would help their cause if Chinese interests would buy at least one large overseas parts supplier, and more brands than just Saab and Volvo, while they are cheap.