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CHINA: Faurecia looks to SUV and Sedan growth

By Simon Warburton | 17 November 2014

"China will reach EUR4bn" -  Faurecia deputy general manager Jingcheng Li

"China will reach EUR4bn" - Faurecia deputy general manager Jingcheng Li

Faurecia says predicted growth in China's SUV and Sedan markets will be significant as it looks to capitalise on improved performance in both segments.

China is experiencing something of a slowdown compared with the heady days of exceptionally strong growth, but still represents genuine opportunity for OEMs and suppliers.

Overall market growth to 2020 is expected to be between 6% and 7% - in line with GDP increase- although the second half of this year is thought will see something of a decline in the rate of volume rise.

"By the end of October, overall the market growth in terms of production is almost 8%, but in sales is 6.5%," Faurecia deputy general manager China Division, Jingcheng Li, told just-auto, from Shanghai. "This is the overall market, including passenger vehicles and commercial vehicles and this performance is negatively impacted by commercial vehicles.

"In the passenger vehicle segments, you have mini-vans, which [are] mainly produced by local Chinese OEM [s], but if you look at SUVs and Sedans, growth is significant, about 10% this year and this is the segment where Faurecia is the more present.

"There will be a slowing down, but we believe within the different segments of the automotive industry we can still enjoy some growth, around 6%-7%, even to 8%."

Faurecia reviews its mid-term plan every year and maintains it is on track to double sales in China to more than EUR4bn (US$5bn) during the next four years, as it looks to grow at twice the market rate.

"The EUR4bn is the mid-term plan - we renew it every year and we re-confirm based on the business situation," said Li. "China will reach EUR4bn.

The component producer has a range of relationships with partners in China, notably with Chang'an Automobile Group, one of the country's largest and with Faurecia PowerGreen Emissions Control Technologies, for example.

The latter is a Shanghai-based joint venture which started last October and will mainly serve the Guangxi Yuchai Machinery Company, one of the top three commercial engine makers in the Chinese market, helping the manufacturer to meet increasingly stringent emissions regulations.

"We have to work on a case by case basis," said Li. "Being [an] automotive parts supplier, we do not have the same obligation or rules imposed by the Chinese government to the OEMs. We can negotiate on a stand-alone basis."

The rapid growth of China's economy, mirrored in part by the aspirations of a growing population, have nonetheless led to a focus on managing public finance, although Beijing still looks to auto as a key economic driver.

"The Chinese government has significant issues [for example] public debt, which is huge," said Li. "[The automotive industry is clearly a focus for the central government.

"Between China and Europe this year, there is a lot of top-level visits and [in] each of those visits automotive is always omnipresent in their discussions."

During the next five years, Faurecia estimates the Group will invest EUR400m in China and anticipates it will have 55 plants and more than 1,200 R&D engineers, up from the current 38 sites and 800 specialists.