With the Chinese vehicle market in sharp decline for much of the last two years, leading Chinese automakers are stepping up their efforts to expand overseas – with key growth markets in the Asia-Pacific region high on their lists of priorities.
One of the country's largest automakers, state-owned SAIC Motor, has taken the lead in establishing a significant presence in the Asia-Pacific region, with a strong network of manufacturing facilities already in place in a number of countries. The company is now focused on rolling out its local sales networks built around the MG (Morris Garages) brand, which the Chinese acquired following the collapse of the UK's MG Rover in 2005.
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By GlobalDataSAIC Motor hopes to accomplish what many European and US brands have failed to do – to successfully challenge the dominance of the Japanese automakers in the Asia-Pacific region. After many years of losses, Ford and GM have exited key markets in the region, including India and Indonesia, while operating with reduced product portfolios in other markets.
While Mercedes-Benz and BMW have a strong niche in the luxury car segment, and Ford has a reasonable presence in some individual markets such as Vietnam and Thailand, other European manufacturers such as PSA Group, Renault and even Volkswagen have also struggled to establish much of a presence in the region.
Earlier this year SAIC Motor launched vehicle production at a plant in Halol, in the Indian state of Gujurat, which it acquired from General Motors (GM) in 2017. Through its MG Motor India subsidiary, it began selling the locally-made 1.5L Hector SUV in July, competitively-priced at INR1.248m (US$17,800) for the entry-level 1.5L model. It also sells a 1.5L petrol/hybrid model and a 2.0L diesel variant.
The MG Hector has been relatively well accepted by the local market, with more than 13,000 units delivered to the local market by the end of November. Other models are set to follow shortly, including a six-seater SUV based on the Baojun 530 in early 2020. Eventually, the company will look to supply export markets from India.
SAIC's early success in this market has prompted it to consider GM's remaining plant in India, a 160,000 unit/year facility in Talegaon in the state of Maharashtra. But it is no hurry, with the 110,000 unit/year Halol plant more than sufficient to meet its immediate needs – especially given the current market slump.
SAIC Motor has had a presence in the Thai market since 2014 and began production at a majority-owned joint venture plant in Rayong province at the end of 2017 with local partner Charoen Pokphand Group (CP Group). The SAIC Motor-CP facility has an annual production capacity of 100,000 units and the company's total production in the country hit 29,000 units last year, including the MGS, MG3, MG5 passenger cars and the ZS SUV – mostly for sale in Thailand. In September it launched production of the MG Extender pickup truck.
In the first ten months of 2019 SAIC Motor sold over 21,000 vehicles in Thailand and is set to introduce new models in the near future, including locally-produced electric and plug-in hybrid vehicles, and also focus more on exporting to other markets in the region.
SAIC Motor's joint venture with General Motors and Liuzhou Wuling, called SAIC-GM-Wuling Automobile (SGMW), has firmly established itself in the Indonesian market with sales of around 17,200 units last year, making it the sixth biggest passenger vehicle manufacturer in the country. In the first ten months of 2019 the company sold close to 16,000 units, up almost 16% in a vehicle market that decline by close to 10%. The Almaz small SUV and the Confero compact MPV are its two best-selling models, followed by the Cortez compact SUV.
SGMW completed construction of its plant in Bekasi, just east of the capital city Jakarta, in 2015 and is designed to produce up to 150,000 vehicles per year at full swing.In September of 2019 the company began exporting vehicles to other markets in the region, including Thailand, Brunei and Fiji.
Other Chinese vehicle manufacturers have more limited operations in the region, apart from Geely which owns the maximum-allowed 49.9% stake in Malaysia's first national car company Proton. Foton, Dongfeng and other commercial vehicle manufacturers mainly operate small-scale assembly operations and partnerships in selected ASEAN markets.
Great Wall Motors (GMW) is keen to repeat SAIC Motor's early success in the Indian market, with local reports suggesting it is considering investing US$1bn in a plant in Gujarat to produce passenger vehicles, including electric vehicles. It had previously been linked with buying GM's old Talegaon plant in partnership with SAIC Motor.
SAIC Motor is hoping to avoid making some of the pitfalls which other Chinese vehicle manufacturers suffered in their earlier attempts to establish a presence in the region, such as Chery and even Geely: going too cheap. It is waiting for opportunities to bring in electric and hybrid vehicles into these markets and is offering other advanced features such as connected technologies and services.
