Year in review: China's ascent to top of global auto market

(China Daily)
Updated: 2010-04-24 06:52

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Marching south

Volkswagen Group, the top overseas passenger car maker in China, unveiled an aggressive plan to expand in south China last November during the Guangzhou auto show in a move to grab greater market share in the region where Japanese brands have long dominated.

The German carmaker aims at a three-fold increase in south China sales to more than half a million units by 2018.

The group, together with its two Chinese joint ventures Shanghai Volkswagen and FAW Volkswagen, will launch more of new products in the region and expand dealer networks in a bid to further improve customer satisfaction.

Volkswagen's south China strategy covers Guangdong, Zhejiang, Jiangxi, Fujian and Hainan and Guangxi. The entire region generates roughly a third of China's GDP.

In 2009, south China only comprised only 12 percent of Volkswagen's overall sales in the country, much less than the 20 percent in both the nation's north and east.

Volkswagen reportedly plans to build two assembly plants with billions of yuan in south China with its two joint ventures to catch its Japanese rivals. Japan's top three carmakers Toyota, Nissan and Honda have large-scale plants in Guangdong.

In the first quarter of this year, Volkswagen held grand ceremonies in Guangzhou to launch its China-made products, the Tiguan SUV and Golf GTI sports car. US carmaker General Motors also has a significant market share in south China.

New way for M&A

Beijing Automotive Industry Holding Corp (BAIC), the partner of Daimler and Hyundai Motor, last December agreed to buy part of assets of General Motors' Swedish unit Saab for just $200 million in a bid to develop its own-brand cars.

The assets include two Saab models - the 9-5 and 9-3 and powertrain technology and tooling, but not the Saab brand. SAIC Chairman Xu Heyi described the deal as "very worthy".

BAIC's move may be a new economical way for Chinese automakers to get most-wanted foreign assets, instead of buying an entire foreign carmaker, to develop their own brand cars.

In 2004, China's largest auto group SAIC Motor paid $500 million for a 49 percent stake of South Korea SUV maker Ssangyong Motors. However, the Korean company went bankrupt in January last year, making SAIC's investment a total write-off.

Xu said BAIC plans to spend 33 billion yuan over the next three years to develop three to four passenger models under its own nameplate as well as three turbocharged engines based on the acquired Saab assets. The company is also building a 150,000-unit plant in Beijing for its own-brand cars.