By on November 12, 2009

"Greatly develop the sectors of culture, communication and transport." Picture courtesy

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.

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14 Comments on “China’s Automotive Industry Receives New Orders: Export, March!...”

  • avatar
    Jerry Sutherland

    It might be a long shot but if China ever gets quality and innovation down, they’ll be a huge force in the automotive industry.Right now (at the risk of offending vintage Hyundai Pony collectors) they’re 25 years behind Korea.

  • avatar

    what the chinese dont understand about marketing in the west is using half naked women on all printed and broadcasted matter. They would do well to contact the top modeling agency and design a swimsuit calender for each product line complete with television “spots” that can wet the pallet of western consumers.

  • avatar

    Chinese cars will be welcome in Africa. After-all, they’ll be buying them with Chinese money.

  • avatar

    How many autos does the US export each year?

  • avatar

    I have to wonder who they expect will buy all these vehicles.  They must be targeting dominance in developing markets.  At the rate we keep borrowing money for more huge government programs, in ten years the dollar will have crashed and the US market will be a basket case unable to afford to import much of anything.  My guess is that Europe, Japan, and Brazil will largely insulate their domestic auto industries from Chinese competition. What does that leave?  India? Africa?  Latin America?  How large are those markets?

  • avatar

    Based on that poster, it looks like Lyle Lanley has been doing transportation planning in China.

  • avatar

    You mean “whet” the appetite, but didn’t the girl above wet your whistle?

  • avatar
    Mr Carpenter

    EEGeek, it seems that the Chinese have already answered your question with their actions.  They’re exporting right now (in small numbers, to be sure) to 3rd world countries, and 2nd world countries all over, and assembling cars locally where this is advantageous.  Just as the major auto manufacturers from much of the rest of the world have done for upward of 100 years. 

    As for the USA, I suspect that China will demand some exports to North America, including the USA, and this is an ongoing process as we speak. 

    Brilliance has a partner in the USA and continue to make promises (as yet unfulfilled) about US deliveries.  A planned Mexican assembly plant by FAW just fell through; I suspect they’ll try again (perhaps in Canada and/or somewhere in South America?)

    BYD surely will be coming soon, with electric and gas-electric hybrids.  Wasn’t it Warren Buffet who bought a huge chunk of BYD recently?  They’re on the way here.  It’s just that they’re on stealth mode right now. 

    Also Mahindra are coming (from India) and the diesel trucks are supposed to be arriving early next year.  As usual, I’ll believe it when I can test-drive one at a local dealer…

  • avatar
    John Horner

    Meanwhile, back in the US, we are told time and time again that the greatest evil would be for the government to have any sort of Industrial Policy.
    “Other countries, such as Germany and Japan, typically export the same amount of cars they consume at home.”
    Germany and Japan are small countries with populations of about 82 million and 128 million respectively. China has a population of about 1,300 million people. The US is at about 305 million.

  • avatar

    Here’s some questions I have:

    How many North American (US and Canada) manufactured cars does Japan import?
    How many do they export to North America?
    Who pays for the health benefits of Japanese auto workers?
    What is the average (or median) wage for Japanese auto workers.
    Same questions for South Korea.

    • 0 avatar

      You talk like Japan doesn’t import foreign build cars. But that is simply not true. For instance BMW and Mercedes sell more cars than Lexus. And Peugeot and Volvo are also not rare on the streets of Japan. The problem with  North American cars is not Japan but the cars itself because they don’t sell in Europe either.
      ps. Maybe it isn’t only the cars but also the fact that Ford and GM had local car companies there

  • avatar

    Zhao Hang certainly identified the problems with the Chinese car industry.  The real question is how they will address those problems and meet their stated export goals.

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