China's Automotive Industry Receives New Orders: Export, March!

Bertel Schmitt
by Bertel Schmitt

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.

Bertel Schmitt
Bertel Schmitt

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=""> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href=""> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

More by Bertel Schmitt

Join the conversation
3 of 14 comments
  • Bigbadbill Bigbadbill on Nov 12, 2009

    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.

    • Charly Charly on Nov 12, 2009

      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

  • Lumbergh21 Lumbergh21 on Nov 12, 2009

    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.

  • Grant P Farrell Oh no the dealership kept the car for hours on two occasions before giving me a loaner for two months while they supposedly replaced the ECU. I hate cords so I've only connected it wirelessly. Next I'm gonna try using the usb-c in the center console and leaving the phone plugged in in there, not as convenient but it might lower my blood pressure.
  • Jeff Tiny electrical parts are ruining today's cars! What can they ...
  • CEastwood From zero there is nowhere to go but up . BYD isn't sold in the U.S. and most Teslas are ugly azz 90s looking plain jane drone mobiles . I've only seen one Rivian on the road and it 's not looking good for them . I live out in the sticks of NW NJ and EVs just aren't practical here , but the local drag strip thrives in the warmer months with most cars making the trip from New York .
  • Lorenzo Aw, that's just the base price. Toyota dealers aren't in the same class as BMW/Porsche upsellers, and the Toyota base is more complete, but nobody will be driving that model off the lot at that price.
  • Mike The cost if our busing program is 6.2 million for our average size district in NJ. It was 3.5 last year.