Chinese carmakers are throttling back plans to export their cars into major overseas markets such as Western Europe and North America, according to research undertaken for a just-auto members’ management briefing.
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The study found that Chinese carmakers’ attentions are instead currently focussed on the need to supply a growing domestic market.
Ambitious export plans have been revised in the light of the need to meet relatively stringent crash-testing and emissions regulations in developed markets.
Nervousness about exporting to the West, and the damage that can be done if the products are not up to scratch, was brought home to Chinese carmakers late last year following the high-profile failure of the Landwind SUV (made by Jiangling Motors) in a German crash test.
The Landwind, derived from an Isuzu design from the 1980s, ‘catastrophically failed’ a crash test conducted by German motoring organisation ADAC. The film of the test made for disturbing viewing – the car’s bonnet is seen slicing into the head of the crash-test dummy as the front of the car collapses completely, forcing the steering column into the dummy’s chest.
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By GlobalDataAlthough the car is legal – it is sold in Europe in low volume under single vehicle type approval regulations – the Chinese authorities have moved quickly to restrict export licences to carmakers that might damage the image of China overseas. The Chinese authorities also fear that unregulated exports of cars could attract dumping accusations in Europe or the US.
Larger Chinese carmakers are not expected to encounter problems getting export licences but their efforts will be concentrated on developing high-quality models for export rather than pushing current models – which would be perceived as low quality in Western markets.
The author of just-auto’s management briefing, ‘China automotive market review 2006’, Mark Bursa, believes that the Chinese are still coming to world markets but that they are now much more cautious.
“The Landwind crash-test debacle was a wake-up call for Chinese manufacturers, especially those that were proceeding apace with plans to tie up with local partners for an early assault on Western markets. But those plans have been slowed as they have realised that getting quality right is crucial. Any bad publicity at this early stage could damage long-term export prospects,” he said.
“They are taking their time to make sure they get export quality right and they are also getting assistance from Western suppliers and consultants.
“In the meantime, they have growing domestic market needs to satisfy with their current model ranges. They still have big export ambitions, but they will exercise caution and take a characteristically long view of things.”
“I don’t expect Chinese automakers to be making a serious assault on the US and Western European markets as volume manufacturers until the first half of the next decade,” he added. “But I believe we will see niche market entrants from companies such as Great Wall, which showed a range of SUVs and pick-ups at the Paris Show. These companies will pave the way, and might surprise a few people.”
The full just-auto.com management briefing, ‘China automotive market review 2006’ is available to just-auto membership subscribers.
See also: EMERGING MARKETS ANALYSIS: Chinese in Paris – not with a bang, but with a Wingle
