The Shanghai auto show opens on Monday 20 April. As every year, the Chinese living (Shanghai Beijing alternates with other year) is the strategic meeting automotive manufacturers worldwide. And for good reason: the Chinese market is by far the world’s largest auto market with nearly 22 million vehicles per year, against less than 17 million in the US
The Chinese market has long been. seen as an Eldorado for foreign manufacturers. With an average growth rate of over 20% per year in the 2000s, there was room for everyone … Provided to comply with paperwork and accept to organize its production through joint ventures with local manufacturers.
Brands multiply discounts
But today, the market has grown from exponential growth to a slowdown. In 2014, the market grew by “that” 7% … No need to panic, but it’s less than half the performance of the previous year. And that was enough to push brands to increase discounts at dealers. “There was a battle between manufacturers to gain market share,” says Hadi Zablit, managing partner at Boston Consulting Group, automotive expert. The need to maintain volumes suggests that manufacturers fear overproduction. But Hadi Zablit moderates this risk.
“Chinese factories are much more flexible than European factories This will not fear, to some extent, overcapacity. “
Moreover, this economic downturn is less structural than cyclical.
” Although the suffering of the world economy, the slowdown in Chinese growth is partly driven by the Chinese government who wanted to prevent overheating of the economy, “said Josselin Chabert, an analyst with PwC Autofacts.
The registration quotas in major cities (eight in all cities, including Shanghai and Beijing) are also an obstacle expensive market, especially as these restrictions may soon expand to new cities. “By 2020, fifty cities could be affected. In this horizon, it is estimated that the impact on the market will be 4 to 5 million cars a year” , Judge Hadi Zablit .
A very low rate of equipment
But manufacturers would be wrong to anticipate a prolonged slowdown of the Chinese automotive market. First, because the appetite of the new middle class is far from closed. The Chinese equipment rate is 5% of the population against a ratio of 80% in the United States. Then the new geography of China’s growth is an interesting opportunity according to analysts. “The growth pool remains important in terms of volume because it transfers to the central China,” Josselin Chabert observed.
In fact, manufacturers are turning more and more towards a qualitative approach because if the Chinese market gradually came to a maturation phase in terms of volume, the other lever of growth is the increasing range of products. In this regard, foreign manufacturers have a real part to play, because in this field, Chinese consumers only have eyes for each other. Local brands are constantly losing ground because too confined to low-end segments, especially, enjoying a disastrous image to the local consumer. New technologies, perceived quality, brand image, innovative actuation … foreign brands have a range of items that local manufacturers are not yet able to integrate, despite industrial partnerships. “It will take time for a Chinese brand so its Entry segment, with a few exceptions” , says Hadi Zablit. For its part, Josselin Charbet believes that the local automotive landscape is moving towards “consolidation will eliminate Chinese brands.”
The SUV, the Trojan horse ? Renault
Finally, there is one last lever now well established by international manufacturers: SUVs. In 2014, sales of SUVs increased by over 30%, according to figures released by the China Association of Automobile Manufacturers (CAAM).
That will be probably the front door from which Renault hopes to enter the Chinese market. The French brand unknown in the country with beautiful hand assets like Captur and its runaway success in Europe, but also with the Qajar, the sister of the famous Qashqai SUV. Carlos Ghosn beautiful proclaim target 6% market share, the fact remains that the French brand comes down other brands.
“S ‘ installed today on the Chinese market is more difficult, warns Hadi Zablit, while agreeing that target the SUV offers “possible to achieve margins (…) but it will not be the Eldorado,” says t- He immediately.
Renault can count on its partner Nissan, very present in China to leapfrog stages. But it can also count on infidelity Chinese consumers whose car culture is still very low. In the medium-end, nearly two-thirds of the Chinese want to change brands, half the premium segment according to a study by the Boston Consulting Group. “The Chinese consumer discovers the world of automotive and educates. They do not yet know what they expect from a car, “ says Hadi Zablit. Nothing is gained on this giant market …
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