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The “Big Three” of China’s passenger vehicle market

FAW-Volkswagen, Shanghai-Volkswagen and Shanghai-GM have held the top three spots in China’s passenger vehicle (car, SUV and MPV) market over the past 10 years. Despite the ups and downs in the overall Chinese auto market, which witnessed the world financial crisis in 2008, the country’s stimulus policies in 2009 and a booming 2010 over the last three years, the “Big Three” carmakers have held onto their leading positions in China. According to the latest data, Shanghai-GM, Shanghai-Volkswagen and FAW-Volkswagen sold 1,038,900, 1,001,300 and 869,900 units of vehicles in 2010 respectively, taking the top three spots in sales in the passenger vehicle market.  

China formally joined the WTO on December 11, 2001, and the country’s auto industry has been growing rapidly ever since.

At the end of 2002, Shanghai-Volkswagen, FAW-Volkswagen and Shanghai-GM grabbed the top three spots by selling over 300,000, 200,000 and 100,000 units respectively, and formed the famous 3:2:1 pattern in the industry. In the next nine years, these three joint venture automakers have taken turns for the No. 1 position, with Shanghai-Volkswagen and Shanghai-GM each being the sales champion for four consecutive years.

China’s auto industry has witnessed a high-speed development in the first decade of the 21st century with the Big Three playing an important role in turning China into the world’s largest auto market in the world. In 2002, the three automakers had a combined 49 percent of China’s passenger vehicle market with total sales reaching 619,716 units. After 2002, China lowered the entry threshold in the auto industry, and as a consequence, the number of players rose from 21 in 2002 to 42 in 2010. With more players competing in the market, the combined market share of these three joint ventures dropped quickly to 25.4 percent in 2008. Things have been better off in the past two years and their market share bounced back to 25.84 percent in 2010. The Big Three increased sales by 56,000 units that year and saw a 0.5 percentage point growth from 2009.

 

 

Year

Shanghai-GM

Shanghai-VW

FAW-VW

Top 3 total

PV Total sales

Top 3 combined market share

2002

110,763

301,095

207,858

619,716

1,265,050

49.0%

2003

201,188

398,023

298,006

895,217

2,189,682

40.9%

2004

252,869

354,338

300,118

907,323

2,514,133

36.1%

2005

325,429

287,118

240,120

852,667

3,139,651

27.2%

2006

403,402

349,088

345,318

1,097,808

4,258,058

25.8%

2007

500,308

456,424

461,369

1,418,101

5,309,728

26.7%

2008

458,642

490,087

498,953

1,447,682

5,692,049

25.4%

2009

727,631

728,238

669,180

2,125,049

8,380,870

25.4%

2010

1,038,988

1,001,357

869,979

2,910,324

11,265,716

25.8%

Note: Numbers in red indicate top sellers of each year.  

Then how did the Big Three stay ahead of furious competition?

All of the three automakers adjusted their operation strategies during the economic downturn. By introducing a greater variety of models, the Big Three also provided products with new innovative technologies to consumers. Moreover, the three automakers launched their own unique aftersales service to get close to their customers and improved their dealer networks to provide convenience to customers.

As China was growing quickly into a large auto market globally, Volkswagen started to allocate more investment to the country and launched a number of new models including the Tiguan and the new Polo. The Tiguan reached a nearly 10,000 units in monthly sales after hitting the market, and the self-developed model, the Lavida, grabbed the second place among single vehicle brand sales in that year with 250,000 units delivered. The new Golf 6 launched by FAW-Volkswagen was well accepted in China’s hatchback market and the Audi Q5 was very popular among China’s newly riches. The CC model, with its distinct market position, was designed exclusively for drivers pursuing fun on wheels.

The high sales of the two Volkswagen joint ventures in China could be attributed to the use of the market leading TSI+DSG technology. Of the 1,870,000 vehicles sold by the two joint ventures last year, 34 percent were equipped with this technology. Shanghai-GM is renowned for its meticulous marketing research. After four years of research and development by Pan Asia Technical Automotive Center, the company’s new Sail brand was well received by the market. Sales of the new car reached 130,000 units in 2010 and accounted for 12 percent of the total sales of Shanghai-GM. The Buick Excelle XT (hatchback and sedan) launched last year was positioned as a high-end mid-class car. Together with Chevrolet Cruze, Shanghai-GM delivered 270,000 units in 2010, accounting for a quarter of company’s total sales. The above models, with their new features and technologies, brought remarkable revenues and glories for the Big Three.

After a period of competing in products, manufacturing and sales and marketing, automakers began focusing on aftersales services. Shanghai-GM innovatively released its “Buick Care” service brand in 2001, the first of its kind in China. The “Buick Care” program claims to “care for you more than you care for yourself.” The Chevrolet published its own aftersales service brand, the “Chevrolet Golden Bowtie Service” in 2010. Wearing a brand conception of “know your car and know you better,” the company dynamically adjusted service in response to customer demands.

Shanghai-Volkswagen introduced its all-new service brand “Techcare” in 2005 and the “HumanTouch” service for the Skoda brand the following year. With the principle of “concern about cars, concern more about people,” the two programs incorporated sales and service into a chain, so that customers were able to enjoy a considerate care from the manufacturer.  FAW-Volkswagen launched its service brand entitled “precision means concern” in 2006 and introduced the “AudiTopService” system into China in 2008 in an effort to provide quality and professional services to its customers.

Moreover, the Big Three continued optimizing or expanding their 4S dealerships across the country during the nine years since China joined the WTO. For example, the Buick brand of Shanghai-GM now owns 441 dealers after more than 10 years’ unremitting efforts. The 4S dealerships of the Chevrolet brand have increased to 335 to adapt with its sales boost. Shanghai-Volkswagen now has 491 dealers for the Volkswagen brand, and 190 dealers for the Skoda brand. The Volkswagen and Audi brands under FAW-Volkswagen own 390 and 170 4S dealerships respectively.

 

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