The Financial Times has revealed an insidious plot: “Foreign carmakers wishing to build new plants or add capacity in China’s burgeoning car market are being told by the government that if they wish to expand, they must develop a low-cost local car brand.”
It must be a REALLY slow news day (it is). Our esteemed readers have known of this trend for a long time. First out of the gate with a local car brand actually was GM, which started the BaoJun brand last year at their SAIC-GM-Wuling joint venture. Ford has been rumored to be working on a standalone Chinese brand also. Nissan and Honda are in the game. Volkswagen is rumored to be working on a Chinese brand. Actually, it came so thick that in December, we couldn’t help it and headlined: “From Venus to Everus: Foreign Makers Create Fake Chinese Brands.”
There sure has been a lot of talk and action on this front for a long time. But “must”? I haven’t heard of any guns put to the heads of captains of joint ventures.
Indeed, the FT could find no smoking gun and writes: “While Beijing has spoken of promoting local car brands, no central government ruling or written policy is known to exist on the subject. “
According to the FT: “French producer PSA Peugeot Citroën, which is pushing its cars upmarket globally and, until recently, rejected the notion of producing low-cost cars, confirms that it is now studying the possibilities.”
That also is old hat. TTAC readers have long known of a not very enlightened make-low-cost-PSA-cars-in-China-and-export-them-to Russia project since last year. And doesn’t PSA want to revive SIMCA?
Anyway, it sure looks like the FT fell victim to a gabby Frenchman again.
Says the FT: “Philippe Varin, the group’s chief executive, recently told the Financial Times that developing a local brand was “part of the deal” in its new joint venture with Chongqing-based producer Chang’an, which is installing capacity to produce up to 200,000 cars a year from 2012 in Shenzhen. He said that Peugeot was considering offering some of the low-cost cars for export to other markets, but added that the French group had yet to make a final decision.”
Folks, I’ve said it before and I say it again: These “low cost Chinese cars” are not for China’s farmers. They are (read Varin’s last sentence) for export. One of my first articles I wrote for TTAC in 2008 was headlined “Chinese Government: Our Car Exports Suck.” Exports still suck, now more than in 2008. The Chinese Government is anything but stupid. They are well aware that their own car companies are yet unable to build a car that will survive in the murderous world market. Enter the fake Chinese brand. Cars built with approved overseas technology. But the car is no longer licensed from a foreign entity that forbids export. Bingo.
Now please, FT, write it down. Thank you.