By on June 4, 2013

This is Part 2 of a 5 Part-series about how the Chinese car manufacturers are faring abroad.

You can check out Part 1 about Africa here.

If Chinese carmakers have started exporting to Africa in the early 00′s, they set foot in Latin America even earlier, with JAC starting to export trucks to Bolivia back in 1990. Similarly to the strategy they adopted in Africa, the Chinese have initially focused on the less developed car markets in the region. They are now in the process of stepping up their involvement by launching in the bigger, more mature markets like Argentina and Brazil.

In fact, the foundations the Chinese have built in secondary Latin American car markets are potentially their strongest in the world so far

FAW S80. Picture courtesy of www.autowp.ruFAW S80. FAW is the 10th most popular brand in Uruguay vs. #16 at home in China.

The first logical anchor points in the region are Uruguay and Paraguay, both located between Argentina and Brazil and all part of the Mercosur, which makes it easier to export towards those two powerhouses as local assembly with 30% to 50% share of local components currently receive zero-tariff status inside the Mercosur. Both Chery and Lifan (40,000 units/year capacity) have assembly factories in Uruguay while Dongfeng has one in Paraguay.

In Uruguay, 26 of the 60 brands on sale are Chinese, capturing 23.4% of the market so far in 2013 – their highest country penetration outside of China and actually on par with the penetration of Chinese passenger cars within China! There are 7 Chinese carmakers in the Uruguayan Top 20 and 2 among the Top 10: Chery is 6th with 6.8% share after peaking at #2 and 12.2% share in June 2011. FAW is 10th at 3.9%, followed by Geely at #12 and 2.7% and Great Wall at #14 and 2.2%. For comparison Toyota ranks #13 with 2.6% of the market… 

DongFeng Mini Pick-up. Picture courtesy of www.autowp.ruThe DongFeng Mini Pick-up is now produced in Paraguay.

In Paraguay, the Chinese hold 9% of the passenger car market but 59% of the truck market! There were 10 Chinese among the Top 30 best-selling brands in 2012, led by Dongfeng which now produces pick-ups locally, up 57% to #11, Great Wall at #18, ChangAn at #21, Haima at #22, Foton at #23 and ChangHe at #24.

Geely CK. Picture courtesy of GeelyGeely CK Police car in Cuba

Peru is another very important hub for Chinese manufacturers in Latin America: it is one of the fastest growing car markets in the world, with the last 3 years all being new records topped up by 178,000 registrations in 2012, and is “facing” China on the Pacific Ocean, making it an enticing port-of-entry into the continent. Roughly 15% of the Peruvian car market go to Chinese models, and latest data shows JAC at #9 in the overall brands ranking and Chery at #10 in the passenger cars one, with Great Wall at #12 and Geely at #19.

Local analysts even estimate that as much as 96 Chinese car brands (who knew there even were that many?!) are sold in Peru both formally in dealerships and informally by rogue vendors…

DongFeng S30. Picture courtesy of www.autowp.ruThe DongFeng S30 was the best-selling model in Venezuela in December 2012…

Venezuela is a slightly different situation because the exchanges with the rest of the region are more patchy, so the Chinese’s success so far has stemmed either from local production – Chery has started assembling cars there in 2011 but no figures are available – or direct agreements with the Chinese government, like the unprecedented 4,000-unit batch of DongFeng S30 imported in late 2012 which enabled the model to simply take the lead of the sales charts last December. The S30 has since celebrated its 5th consecutive month within the Top 5 best-sellers in Venezuela last month.

Chevrolet N300. Picture courtesy of Chevrolet ColombiaChevrolet N300

If we go up one notch to Chile - yet another record-breaking market at 340,000 sales in 2012, we notice that the best-selling model in the country, the Chevrolet Sail, is actually imported from China. Chinese brands have a 7% market share, with no less than 18 of them represented in the brands ranking. They are led by Great Wall at #11, Chery at #16, JAC at #20, Geely at #26, BYD at #27 and Hafei at #30. In Colombia, there is one (hidden) Chinese model in the Top 40 in 2012: the Chevrolet N300 which is actually a rebadged Wuling Rongguang, up 171% to #18. Bolivia and Ecuador, although no sales data is available, are two other developing Latin American markets likely to have seen a recent flood of Chinese cars.

The Caribbean region is yet another under-developed zone most carmakers traditionally sidestep, except the Chinese. Geely regularly ships cars to Cuba, the last batch from October 2011 was composed of 1,300 Geely CK (now a common sight in La Habana as a police car) and 250 Emgrand EC7. In the Dominican Republic, a few Chinese models have already managed to break into the Full Year Top 20 like the BYD F3 (#9 in 2010), the DongFeng Cargo Van (#14 in 2011) and the Jinbei Haise (#18 in 2011).

JAC J3. Picture courtesy of JAC BrazilBrazilian JAC J3

This all means that Chinese carmakers have now established a solid footing in almost all Latin American markets,  working extremely hard hard to secure the foundations for long-term success in the region. They are now using these stepping stones to access Argentina (800,000+ annual units) and Brazil (record 3.6 million units in 2012), where the volumes really are. In Argentina, Chery imports from Uruguay and as a result has seen a few models make their way up the ladder: both the Chery QQ (#47) and Tiggo (#53) reached their highest ranking so far in the country in March 2013.

In Brazil, JAC broke with the Chinese tradition and chose to enter the market all guns blazing on 18 March 2011, which they called J-Day. They simultaneously inaugurated 50 dealerships across the country and hired a famous TV presenter, Fausto Silva, as their ambassador in a multi-million dollar TV campaign (watch above).

JAC J2. Picture courtesy of autossegredos.com.brThe JAC J2 is now the best-selling Chinese model in Brazil (#64 in April 2013)

However JAC’s strong start in the country has since fizzled out. The JAC J3 hatchback (#36) and J3 Turin sedan (#56) both hit their highest ranking only 3 months after launch in June 2011 while in the meantime the Chery QQ peaked at #36 in September 2011, but 2012 was harsh: J3 at -37%, J3 Turin at -40% and QQ at -25%, on the back of increased levies on imports. Now both manufacturers realise their success in Brazil lies in local assembly: Chery is reportedly building a 150,000 annual unit-production facility in the São Paulo state while JAC is set to open a 100,000 annual vehicle-plant in the state of Bahia in 2014.

A very strong base in Latin America’s developing markets should ensure Chinese manufacturers surf on these markets’ predicted explosive growth in the next coming decades. The next challenge is to manage to crack more mature markets like Brazil and Argentina and this will require a much more significant level of investments in the form of large scale manufacturing operations. But the rewards could be priceless: thanks to its brand-new factory producing models tailored to Brazilian tastes, Hyundai has tripled its market share in the space of a few months… No doubt the Chinese are watching with tremendous interest.

Stay tuned for Part 3 of this series tomorrow about Eastern Europe

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12 Comments on “Best Selling Cars Around The Globe: How The Chinese Are Setting Themselves Up For Success (Part 2: Latin America)...”


  • avatar
    OldandSlow

    The DongFeng mini-truck would be a smashing hit in Bavaria!

    You have to admire the Chinese for trying. Local assembly is the smart way to get one’s foot in the door of this market. These non-BRIC countries are the soft underbelly of the global automotive market and are not as fussy as the developed world.

    Even if these countries don’t have adequate foreign exchange, I’m sure the Chinese will extend credits payable in natural resources.

  • avatar

    Like you noted, Brazil has been a tough nut to crack. Yes levies are an important factor but it’s not all. Bear with me:

    Chery QQ: Looks cute (no wonder, it’s started it’s life as a study foe a new 500 before Fiat decided to go retro), is small, economical and well equipped. Everything a large part of the market want. And then…

    JAC: Backed up by the millionaire campaign, lots of the target audience incredibly gave the famous presenter credit and took his word for it. Then the competition came and lowered prices. A Ford Fiesta could be had for the same price and similar levels of equipment. Why buy a JAC then? And then…

    All others: set up, closed shop, launched models, stopped importing models, leaving a couple of thousand orphans. And then…

    Chinese commercial trucklets. Good price, won market, others got worried. And then…

    And then 2 things happened. First, they got greedy. Even before the extra tax, dealers started raising prices. The QQ when launched was the cheapest on the market. Then they raised the price and then they raised it some more. Why buy one if a Fiat Mille or Ford Ka cost the same or less?

    Second, mechanical issues. After the first wave of sales issues started cropping up. Cars rusted for no reason (Brazilian cars don’t), electrical gremlins (can affect everybody, but where’s the support?), difficulty to find parts (QQ’s 10′ tyres can only be had at Chery dealers, Brazilian makers can hardly keep up with production for local makers, they haven’t invested to serve only a few models), faulty brakes, if in an accident car stopped for weeks cause no panel parts, and finally, the word got out the cars are bad drives. Too soft, noisy, wallowy, bad curve manners, as the word got out less people were interested.

    Brazil is a relatively mature market. Aftermarket support, availability of parts and ease of repair, resale value, comfort (as understood by Brazilians), standardized placement of equipment (that the Chinese don’t follow), very weird and poor interior design. All these issues contributed to the downfall.

    As a Fiat exec told me when the Chinese first landed, they were very worried. After a couple of months they relaxed. The Chinese are not ready for prime time here (imagine in the US or Europe…). He estimated it’ll take 10 yrs for them to become real contenders. Until then all they have is price. They don’t compete on other fronts. Yet.

    • 0 avatar
      Athos Nobile

      That 500 study which Fiat discarded, became the Daewoo Matiz then Chevy Spark… highly successful (I bet they’re still naming all the Madonnas for that in Torino). The Chinese copied it, put some lipstick and makeup, some pastel colors and off it goes.

      • 0 avatar

        , I know that, I just didn’t want to get into too much detail as my post would be long enough. The good thing about the Matiz and QQ is that in markets where they’re sold side by side, you can get body panels and put it into each other…

        Seriously, now I’m surprised at the big penetration in Venezuela. I knew the Iranian car had some luck there, now this Chinese car. Why do you think is that? Venezuelans are just not conservative? The initial price is that good? Doesn’t resale knock off any advantage gained in the initial price (in Brazil this is another point, provided you can even sell your Chinese car second hand, the devaluation is much steeper than for ‘local’ brands)?

        • 0 avatar
          Athos Nobile

          Marcelo, it is very simple. Customer hasn’t really changed its purchasing habits. In their case it’s a matter of availability.

          The government (and that’s a generous word for what is in place there) has introduced distortions to the market in the form of policy and currency access. Importing a car requires a license, which is a real PITA to get (if they grant it, whenever they want) and getting the currency to actually bring it is another via crucis.

          To assemble the cars, the OEMs have severe currency limitations (because again, the government controls that), so it is not much what they can produce. I’ve lived through those dramas, when it wasn’t as bad as nowadays.

          So people has to buy what is there, and pays through the nose for it too.

          There are other factors too, the government is importing cars to “sell” them to the military or whoever they see fit. And that’s done via agreements with other governments. They decide which country of origin the cars must come from, usually their buddies: Ecuador, Argentina, China, Brazil…

          I bet you’ve heard about the toilet paper shortages…

          • 0 avatar
            Magnusmaster

            Venezuela is now pretty much a Communist country. The people buy what the government allows businesses to sell. And as long as Cristina is president, Argentina will be on its way to Communism too…

          • 0 avatar

            Yeah Athos. I seem to remember reading that cars were in such sort supply that people would pay anything for a brandnew car as they could use it a while and sell it for more than they paid.

            People here don’t complain too much. Like you said, this government has scored big deals in Venezuela. Sad it’s paid for with the people’s blood and tears.

    • 0 avatar
      MrWhopee

      Not to mention the Chinese car’s quality. When the QQ first arrived here in Indonesia, auto journalists reported that the inner door panel wrinkled as you raise or lower the window. With reviews like these, Chinese cars in general have achieved the role of Yugo in the US back then, materials for jokes. They even tried to sell them as taxis, with no takers. Same thing with their motorcycles, whose market is huge here, the Chinese makers tried to conquer it earlier, years before their autos did. Seems like a good idea, motorcycle buyers presumably are a lot more price sensitive than (wealthier) car buyers. But their sheer lack of quality means none exist in the market today. They may succeed in South America today, with their low, low price, but unless they can bring their quality up to reasonable standard, they’ll fail eventually, and become old jokes like they were everywhere else. Remember, good used cars are still there to give them good, perhaps even insurmountable competition.

      • 0 avatar
        Athos Nobile

        They have been very successful with the motorcycles in Venezuela, no surprises there as they’re cheap. They even have a couple of assembly sites there too.

  • avatar
    TheEndlessEnigma

    Everything shown here looks like blatant copies of Japanese and Korean models.

  • avatar
    Magnusmaster

    “In Argentina, Chery has started assembling a limited amount of cars locally and as a result has seen a few models make their way up the ladder: both the Chery QQ (#47) and Tiggo (#53) reached their highest ranking so far in the country in March 2013.”

    Chery doesn’t assemble cars in Argentina. They assemble them in Uruguay or import them straight from China. They can do this because they pay import taxes and made a joint venture with an Argentinian politician, so they get special treatment. They promised to open a factory in Argentina, but they decided to set up one in Brazil instead.
    The only Chinese company that has or will have a factory in Argentina is Great Wall, and it’s for trucks, not cars.


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