TodayApril 16, 2022

China joint venture domestic foreign cars

Domestic and Foreign cars in China

Gordon Chang, Forbes, and John Batchelor, host of the John Batchelor radio show, and Lou Ann Hammond, CEO, talk about China and cars.

Some of the backstories that make up the radio show are;

Why didn’t Subaru get approval for a Joint Venture in China?

Marvin Zhu, a correspondent for LMC Automotive, wrote in his perspective, “The direct consequence from the rapid expansion is the price campaign. Now, even luxury cars and the most popular SUVs have to join the battle, not to mention low-end models. Weak Chinese brands have become losers. Market shares of Chinese brands in passenger vehicles fell from 32.1% in 2010 to 29.7% in 2011, and further dropped to 28.7% in the first four months of 2012.”

According to LMC Automotive Ltd., there are 28 automotive joint ventures in China. Subaru is not one of them. After failing to secure approval from the Chinese government to create a joint venture with Chery, Subaru has gone back to importing fewer vehicles, at less profit.

A person with knowledge of the subject has said one of the problems with the joint venture was rumored to be that Toyota would take too much foothold in China. Why Toyota? Because Toyota owns 16.75% of Fuji Heavy Industries, aka Subaru.

Is China coming to America?

In December of 2011, Michael Dunne, president of Dunne & Co. and author of “American Wheels Chinese Roads: The Story of General Motors in China,” wrote an article for Automotive News. In the article, Dunne said, “China’s auto industry is already here, you just don’t notice it. The Chinese are hiding in plain sight.” Dunne gave the example of BeijingWest, a joint venture among the investment arms of three large and powerful Chinese state enterprises: Shougang Corp., Bao’an Investment Development Co., and Beijing Fangshan State-Owned Asset Management Co.

In 2009, BeijingWest, a global company with operations in Ohio and Michigan, acquired the chassis division of Delphi Corp. for a reported $100 million. Its plant in Brighton, Mich. specializes in brakes and chassis components.

BeijingWest makes components for the Chevrolet Corvette, Cadillac CTS-V, Audi TT, Ferrari Italia, Land Rover Evoque, and others.

Are Chinese cars gaining marketshare in China? NO

One measure the Chinese government has taken is to require foreign makes with local manufacturing presence to introduce domestic branded vehicles as well.

Nissan just launched a domestic brand, Venucia, last month! A Venucia version of the Leaf was shown on their stand last month in Beijing at the auto show. No details on pricing as no confirmation yet on the sale plan. Dong Feng is the partner for Nissan, Infiniti, and it’s all one entity for manufacturing and selling.

The Renault/Nissan Alliance takes around 6.5% of the Chinese market. 100% of Infinitis are imported to China, but under 5% for Nissan’s brand. The goal of the alliance is a 10% market share in China.

Last year General Motors launched a new company, introducing the Baojun brand in China together with their JV partners. According to General Motors, it was an opportunity to establish a presence in the market below the Chevrolet brand. The Baojun brand competes mainly with Chinese brands. At this point, there’s only one sedan under the Baojun brand, called the Baojun 630. But General Motors will introduce more Baojun vehicles in different segments going forward. The 630 was introduced in the fall of last year with a manual transmission only and about 25,000 were sold in the remainder of 2011. Early this year an automatic transmission was added as an option and sales increased.

In 2011 Kia sold 461,618 units in China for a 30.1% year-over-year increase and through the first 4 months of 2012 Kia sold 157,268 units for a 15.6% rise year-over-year. Kia will begin construction on its 3rd plant in China which will bring manufacturing capacity up to 730,000 units annually (all for the Chinese market) when the plant opens in 2014.
Kia operates in China through a joint venture with a Chinese company called Dongfeng Yueda, as does Hyundai with another local company.

Kaili (FAW-VW) and Tantus (SVW) became local registered trademarks in China last year, one for each of Volkswagens’ joint ventures. Both brands have received the approval of the Chinese authorities to develop and build electric cars for the Chinese market. Volkswagen has already registered two electric vehicles which now form the basis for test fleets. Volkswagen will also be offering electric cars from its own brands in China.

According to people in the know at Volvo, in the eyes of the Chinese government, Volvo is a Swedish-based company that happens to be owned by a Chinese holding company. That does not make Volvo a “domestic” brand in China. No name has been selected for a domestic brand, and no announcement has been made.

Gordon Chang points out that Ford is not creating a domestic brand in China.

And, How is BYD doing?

The numbers below are provided by LMC Automotive

Top International Groups
Volkswagen Group 865,185 14%
General Motors Group 462,376 7%
Hyundai Group 420,178 7%
RenaultNissan Group 319,729 5%
Toyota Group 311,334 5%
Honda Group 208,047 3%
PSA Group 144,036 2%
Ford Group 121,625 2%
BMW Group 103,171 2%
Suzuki Group 99,301 2%

Top China car groups

SAIC 1,456,321 23% Shanghai Automotive Industry Corp(SAIC)(a joint venture with General Motors and Volkswagen in China)
DFM 983,774 15% Chinas 2nd largest automaker, a state enterprise that’s owned by the central government. They have Joint Ventures (JVs) with Nissan, Peugeot, and Honda
FAW 775,565 12% Volkswagen
Chang’an 667,231 10% Changan has dealings with Ford, Suzuki, and Mazda.
BAIC 495,769 8%
Guangzhou 220,120 3%
Chery 190,052 3%
Brilliance 185,859 3%
Great Wall 180,473 3%

Lou Ann Hammond

Lou Ann Hammond is the CEO of Carlist and Driving the Nation. She is the co-host of Real Wheels Washington Post carchat every Friday morning and is the Automotive, energy correspondent for The John Batchelor Show and a Contributor to Automotive Electronics magazine headquartered in Korea. Hammond is a founding member of the Women's World Car of the Year #WWCOTY, and board member of the Women in Automotive.