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article imageOp-Ed: China drives global new car sales

By Joe Duarte     Apr 25, 2014 in Technology
Beijing - Once upon a time, if a car company was serious about making money selling its vehicles, it had to look at the North American market. These days, it’s more important to sell in China.
There are a couple reasons for this — it’s the biggest untapped new car market in the world, with some 18 million new car sales claimed per year, and there is cheap car-building labor available with which to build new cars that can be sold elsewhere in the world.
There is one caveat, though — the Chinese don’t seem to hold too high a regard for intellectual property or even copyrights on design. So, if you want to build your vehicles in China for the Chinese market and for export, you have to be prepared for the fact that your designs may end up being used for Chinese knock-offs, with little recourse available to your company to have the theft of proprietary designs halted.
Still, companies like Ford are more than willing to tailor their designs to the Chinese consumer in order to boost sales of some models and to build those models more cheaply in order to remain competitive in other markets, such as North America. In 2012, Ford had taken legal action to stop Chinese truck-maker Jac from selling its 4R3 — a pickup that could be mistaken for a rebadged F-150 pickup of the time, though its engines were far inferior to those offered in the Ford trucks.
Since many Chinese companies are owned by the state, carmakers’ complaints usually fell on deaf ears.
On the upside, though, the Chinese market is widely believed to have been the savior of many of the world’s auto companies following the events of the 2008 great recession. That elevated China’s two major auto shows — Beijing and Shanghai, in alternating years — to the top of the world’s biggest and most important auto exhibitions.
This year, Ford unveiled its new global Escort compact sedan at the Beijing Auto Show. Market specific details reportedly include a roomier rear seat and cup holders that can snuggly hold iced-tea bottles.
“I think (Escort) will sell around the world but the real focus was led by the Chinese and what they wanted,” Ford CEO Alan Mulally told the Detroit News at the show’s media preview days.
Even Mercedes-Benz, long a stalwart in building one specific car and selling it in every world market, is catering to specific needs in the Chinese market. Its latest unveiling is a C-Class luxury compact extended to also cater to the Chinese market desire for larger rear quarters.
One of the stumbling blocks to blowing sales figures wide open, though, is restrictions on new registrations in the larger cities such as, ironically, Beijing and Shanghai, due to air quality problems. So manufacturers are building the smaller cars that will appeal to smaller outlying cities, where longer drives are expected.
And building those smaller vehicles at reduced labor costs not only keeps them competitive in the Chinese market, but also when it comes time to set prices in North America.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
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