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Independent Chinese brands gain popularity

BEIJING – Chinese independent brand autos have grown in popularity on the domestic market in recent years. In 2006, sales of Chinese brands were up by 25 percent over the previous year, more than 10 percent higher than the growth registered by China-foreign joint venture carmakers, according to the latest statistics released by the State Information Center (SIC).
 
According to a recent survey by the Horizon Research Consultancy Group, a leading market research and consultancy firm in China, 75.7 percent of potential buyers said they would most likely purchase cars of homegrown brands. This is due mainly to the popular perception that the homegrown brands have greatly improved in quality and performance in recent years.
 
Inspired by the explosive growth of the automotive market last year, homegrown automakers have set ambitious production targets for this year. Chery plans to produce 393,000 units, up 30 percent over last year; Geely 288,000 units, up 41 percent; Brilliance-Jinbei 120,000 units, up 100 percent; BYD 150,000 units, up 150 percent; and Lifan 43,100 units, up almost 600 percent.
 
If these automakers achieve their goals, independent Chinese brand vehicles will have a combined market share of 40 percent in 2007, up from 30 percent in 2006. “This would be a big step forward,” said Zhang Boshun, an official of the China Association of Automobile Manufacturers (CAAM). 
 
But in their march toward greater market share, the homegrown automakers face a number of constraints that may put a damper on their development.
 
First of all, industry officials point out, these automakers are generally small in scale. At present, only three homegrown carmakers, Chery, Tianjin-FAW-Xiali and Geely, have an annual production scale of 200,000 units or more. Others are much smaller.
 
Secondly, their cars are mostly of the low-end type. Chinese independent brand cars are generally not as good as those made by joint ventures in terms of quality and performance. In some key technologies involving the engine, transmission, controls and braking system, homegrown autos have not yet reached industry standards.
 
And thirdly, their low pricing strategy has led to a dramatic fall in profitability for homegrown automakers. This is expected to hamper their future development.
 
That is why, for makers of Chinese brand cars, quality improvement is the most important thing to accomplish, according to the Horizon survey. When considering Chinese brands, the people surveyed said they were most concerned about three aspects: quality (66.34 percent), technology (43.72 percent) and safety (32.08 percent).

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