Chinese auto brands have won applauses recently, but still they are unprofitable, according to Zhu Huarong, president of Chang’an Automobile Co., Ltd.
“Chinese brands should strengthen their own competitive capabilities to become profitability through various ways, which is vital for their development, said Zhu. “Chang’an’s 1.5 million sales bring meager profit, and there are still tough problems when facing future competition,” said Zhu. “Things like e-commerce, car rental, telematics, auto financing and insurance have laid foundations or provide possibilities for Chinese brands to profit in the future.”
Besides that, there are several other abilities that Chinese brands urgently need to have to face fierce competition. They are the ability to build classic products and services, the ability to quickly respond to market and consumer needs, and the ability of integration of big data.
Zhu pointed out despite the fast growth of the Chinese auto market in the last decade, Chinese brands remained fragile. There are some general views in the society that Chinese brands are competitive, which is wrong, according to Zhu. Chinese brands compete mainly in low-end market where vehicles are priced below ¥80,000 ($12,308). When it comes to vehicles that are priced above ¥100,000 market, they take a mere 20 percent market share.
Another problem for Chinese brands is that they have similar costs in vehicle production with their foreign counterparts, but their prices are much much lower than that of foreign brands. Zhu cited an example that except for A00-class vehicles, prices for A0- and B-class Chinese vehicles are more than 50 percent cheaper than their international counterparts.
Chang’an aims to achieve a sales target of 3.4 million units by 2025 and build itself into a world-class auto company, according to Zhu. “We believe only by becoming a world-class auto brand, can Chang’an be sure of not being knocked out by competition,” said Zhu.