Marc
6th January 2006, 08:34 AM
From the Asia Times Online (http://www.atimes.com/atimes/China_Business/HA06Cb02.html) Shanghai GM sets the stage for a price war
BEIJING - In a sign of continued cutthroat competition in China's auto market, despite a strong 2005 sales performance, Shanghai GM, the automobile joint venture between Shanghai Automotive Industry Corp (SAIC) and General Motors, cut product prices by as much as 11% on Tuesday.
The move is expected to ignite a price war. The company said the price of its Buick Regal sedans would be lowered by 20,000-26,000 yuan (US$2,479-$3,222). It also slashed prices for its 2-liter Chevrolet Epica sedans by 16,000-18,000 yuan.
Shanghai GM "is taking preemptive price measures to deal with fierce competition in the large-sized-car segment this year", said Yale Zhang, a Shanghai-based analyst with CSM Worldwide
Corp, the US auto-industry consultancy. "The segment will account for major growth of China's car market this year with new competitive entrants and price cuts of existing models. We will see lots of price cuts in the segment during the first half of this year."
Toyota Motor's Camry, to be produced in southern China's Guangdong province in May, is widely seen as a tough competitor in what will be the most fiercely contested area of the market, the mid-size-sedan segment. The Japanese carmaker's venture with Guangzhou Automobile Group said it planned to make at least 50,000 Camry sedans in 2006.
Shanghai GM said the markdown of the Buick Regal was to make room for a new Buick high-end sedan, to be launched in the first quarter of this year. The company said it would also launch the Buick Excelle station wagon and the Chevrolet Lova compact in the same period.
Hua Xue, chief executive officer of cheshi.com.cn, a Beijing-based website that sells cars online, predicted that prices of made-in-China cars would continue to tumble by some 5% this year as a result of market competition and excessive production. Total production capacity in China now stands at 8 million units a year, but only three-quarters of that capacity is used, according to official statistics.
Zhang Xin, with Guotai & Jun'an Securities Co Ltd, said profits from the Chinese auto sector would shrink by about 30% this year compared with last year. Statistics from the China Association of Automobile Manufacturers showed that the completed-vehicle sector reported 17.4 billion yuan in profits during the first 10 months of last year, down 49% from a year ago.
Jia Xinguang, of China Automotive Industry Consulting and Development Corp, said Shanghai GM's performance in China would have an influence on whether GM could maintain itself as the world's biggest automaker in the face of competition from Toyota. "The Chinese auto market has the biggest growth potential for both GM and Toyota. It is increasingly affecting their global race," Jia said.
GM, which is losing market share to Toyota and other Asian rivals in the North American market, has not forecast its output for this year. It predicted last month that it would have made 9.1 million vehicles in 2005. Toyota announced last month that it planned to produce 9.06 million vehicles globally this year, up from 8.25 million units last year.
In China, GM has not revealed its total full-year sales for 2005. During the first three quarters of last year, the struggling US automaker sold more than 472,000 vehicles in China, up 27.8% from a year earlier.
Shanghai GM now has three plants: in Shanghai, Shandong province and Liaoning province. The three have a combined production capacity of 480,000 vehicles a year. GM is also marketing imported Cadillac and Saab vehicles.
"In 2006, we hope to maintain the growth momentum we gained last year," said an official from Shanghai GM. GM also has a joint venture with SAIC and Wuling Motor, a local vehicle maker in southern China's Guangxi Zhuang Autonomous Region. The venture mainly makes Wuling-branded minivans, with an annual capacity of more than 200,000 units.
Toyota expects its sales to surge by 54% from 2004, to 179,000 vehicles last year. It is expected to continue to expand rapidly in 2006, according to Yoshimi Inaba, the company's executive vice president. Officials with Toyota's China operations said the company also aimed to increase sales of its vehicles produced with China's First Automotive Works Corp to 200,000 units this year and 300,000 units in 2007, from 150,000 units last year.
Total sales of made-in-China vehicles are forecast to grow by 12% to 5.6 million units this year, including 3 million cars and 2.6 million trucks and other vehicles.
Shanghai GM No 1
Shanghai GM has become the biggest car seller in China, selling 325,000 cars in 2005, according to statistics released by the China Association of Passenger Vehicle Trade on Tuesday. Its annual sales scored an increase of 29% over the previous year.
Shanghai Volkswagen and FAW-Volkswagen, the two Chinese joint ventures of Germany's Volkswagen, took second and third place respectively, with annual sales of 287,000 units and 270,000 units in 2005. However, the combined market share of these two joint ventures plunged to less than 20%, the lowest since Volkswagen Auto entered the Chinese market.
Beijing Hyundai overtook Guangzhou Honda to become the fourth-largest car seller in China, with annual sales soaring 60% to reach 233,000 units in 2005. Guangzhou Honda realized its annual plan of selling 230,000 cars in 2005, but degraded from fourth to fifth place on the Chinese auto market. Its Accord serial car has been the champion seller among high- and middle-grade sedans for 20 months running, while sales of its compact car Fit have been falling.
Sales of Dongfeng-Nissan hit 153,000 units in 2005, skyrocketing more than 170% over the previous year. Sales of FAW-Toyota cars also surged 60% to top 130,000 units last year. Meanwhile, sales of the domestic Chery brand continued to maintain high growth, exceeding 180,000 units in 2005 and ranking sixth.
BEIJING - In a sign of continued cutthroat competition in China's auto market, despite a strong 2005 sales performance, Shanghai GM, the automobile joint venture between Shanghai Automotive Industry Corp (SAIC) and General Motors, cut product prices by as much as 11% on Tuesday.
The move is expected to ignite a price war. The company said the price of its Buick Regal sedans would be lowered by 20,000-26,000 yuan (US$2,479-$3,222). It also slashed prices for its 2-liter Chevrolet Epica sedans by 16,000-18,000 yuan.
Shanghai GM "is taking preemptive price measures to deal with fierce competition in the large-sized-car segment this year", said Yale Zhang, a Shanghai-based analyst with CSM Worldwide
Corp, the US auto-industry consultancy. "The segment will account for major growth of China's car market this year with new competitive entrants and price cuts of existing models. We will see lots of price cuts in the segment during the first half of this year."
Toyota Motor's Camry, to be produced in southern China's Guangdong province in May, is widely seen as a tough competitor in what will be the most fiercely contested area of the market, the mid-size-sedan segment. The Japanese carmaker's venture with Guangzhou Automobile Group said it planned to make at least 50,000 Camry sedans in 2006.
Shanghai GM said the markdown of the Buick Regal was to make room for a new Buick high-end sedan, to be launched in the first quarter of this year. The company said it would also launch the Buick Excelle station wagon and the Chevrolet Lova compact in the same period.
Hua Xue, chief executive officer of cheshi.com.cn, a Beijing-based website that sells cars online, predicted that prices of made-in-China cars would continue to tumble by some 5% this year as a result of market competition and excessive production. Total production capacity in China now stands at 8 million units a year, but only three-quarters of that capacity is used, according to official statistics.
Zhang Xin, with Guotai & Jun'an Securities Co Ltd, said profits from the Chinese auto sector would shrink by about 30% this year compared with last year. Statistics from the China Association of Automobile Manufacturers showed that the completed-vehicle sector reported 17.4 billion yuan in profits during the first 10 months of last year, down 49% from a year ago.
Jia Xinguang, of China Automotive Industry Consulting and Development Corp, said Shanghai GM's performance in China would have an influence on whether GM could maintain itself as the world's biggest automaker in the face of competition from Toyota. "The Chinese auto market has the biggest growth potential for both GM and Toyota. It is increasingly affecting their global race," Jia said.
GM, which is losing market share to Toyota and other Asian rivals in the North American market, has not forecast its output for this year. It predicted last month that it would have made 9.1 million vehicles in 2005. Toyota announced last month that it planned to produce 9.06 million vehicles globally this year, up from 8.25 million units last year.
In China, GM has not revealed its total full-year sales for 2005. During the first three quarters of last year, the struggling US automaker sold more than 472,000 vehicles in China, up 27.8% from a year earlier.
Shanghai GM now has three plants: in Shanghai, Shandong province and Liaoning province. The three have a combined production capacity of 480,000 vehicles a year. GM is also marketing imported Cadillac and Saab vehicles.
"In 2006, we hope to maintain the growth momentum we gained last year," said an official from Shanghai GM. GM also has a joint venture with SAIC and Wuling Motor, a local vehicle maker in southern China's Guangxi Zhuang Autonomous Region. The venture mainly makes Wuling-branded minivans, with an annual capacity of more than 200,000 units.
Toyota expects its sales to surge by 54% from 2004, to 179,000 vehicles last year. It is expected to continue to expand rapidly in 2006, according to Yoshimi Inaba, the company's executive vice president. Officials with Toyota's China operations said the company also aimed to increase sales of its vehicles produced with China's First Automotive Works Corp to 200,000 units this year and 300,000 units in 2007, from 150,000 units last year.
Total sales of made-in-China vehicles are forecast to grow by 12% to 5.6 million units this year, including 3 million cars and 2.6 million trucks and other vehicles.
Shanghai GM No 1
Shanghai GM has become the biggest car seller in China, selling 325,000 cars in 2005, according to statistics released by the China Association of Passenger Vehicle Trade on Tuesday. Its annual sales scored an increase of 29% over the previous year.
Shanghai Volkswagen and FAW-Volkswagen, the two Chinese joint ventures of Germany's Volkswagen, took second and third place respectively, with annual sales of 287,000 units and 270,000 units in 2005. However, the combined market share of these two joint ventures plunged to less than 20%, the lowest since Volkswagen Auto entered the Chinese market.
Beijing Hyundai overtook Guangzhou Honda to become the fourth-largest car seller in China, with annual sales soaring 60% to reach 233,000 units in 2005. Guangzhou Honda realized its annual plan of selling 230,000 cars in 2005, but degraded from fourth to fifth place on the Chinese auto market. Its Accord serial car has been the champion seller among high- and middle-grade sedans for 20 months running, while sales of its compact car Fit have been falling.
Sales of Dongfeng-Nissan hit 153,000 units in 2005, skyrocketing more than 170% over the previous year. Sales of FAW-Toyota cars also surged 60% to top 130,000 units last year. Meanwhile, sales of the domestic Chery brand continued to maintain high growth, exceeding 180,000 units in 2005 and ranking sixth.
