Auto exports increased by China

Thursday 26 April 2012, 11:22 AM by

As domestic growth slows down in China, the car makers are increasing their exports albeit small in figure. By competing with local and foreign brands, the auto majors of the country are increasing their share in the global auto markets. Although, vehicles made in china are exported to other countries, the markets of US and Europe face no threat as the cars are purchased by the consumer after extensive evaluation. However, in emerging markets like Asia, Africa and Latin America, the low cost cars are becoming popular.

The domestic automakers backed by Bejings support are performing well in the export market. Zhejiang Geely Holdings Group Co. in year 2011 exported 39,600 vehicles, which comprised 9% of its sales volume. Other companies like Great Wall Motors and Chery Automobile Co. are also increasing their exports. According to China Association of Automobile Manufacturers, exports of cars and trucks of China last year reached 849,500 vehicles. Some export vehicles are sold as low as $6,000 whereas most are priced below $15,000.

Even though, there are concerns that production glut would result in China, the drive for exports increases. After a decade of double digit gains, this year China’s auto market is expected to have profit in single digit though Volkswagen AG, Ford Motor Co. General Motors Co. and Japan's three largest brands have announced to expand their production capacities.

Executive vice president of Toyota Motor (China) Investment, Dong Changzheng, said that the company has no plans to export from the country. He disclosed that the government has encouraged the Industry officials to concentrate on exports. A Shanghai-based manager for light vehicle forecasts, Boni Sa at HS Automotive, said, "The profitability on exports is better than for selling cars in the domestic market. So recently we've seen exports from China growing very quickly.”

Many developed countries are not interested in low-cost cars from China as many compromises on features like power windows and air conditioner. A former senior GM executive, Rudy Schlais, who runs Shanghai consultancy ASL Automobile Science and Technology, said, "The type of lower quality car that comes from China just isn't viable for North America or Europe unless it is a specialty vehicle filling a niche.”

Due to vast scale economies and cheap labour, Chinese brands are able to grasp market share in developing countries. China's Geely targets to export one million cars annually, which is 50% of its sales target set for 2015. The main export markets of the company are Saudi Arabia, Ukraine, Russia, Iraq, Chile and Sri Lanka. General Motors, which manufactures cars in an alliance in China, exported 48,000 vehicles last year. Most of these vehicles are sold by the company in South America. The company sells its Chevrolet Sail compact car and Chinese-made mini commercial vans in Colombia, Ecuador and Peru. Vehicles are also exported in Egypt and Libya by the company.

Kevin Wale, GM's China chief, said, "Where there is a gap and we have a product that adequately fits that need, we will export it.” In 2010, low-budget brand Baojun was launched by General Motors along with its Chinese partner Shanghai Automotive Industry Corp. In the same year, Venucia brand was established by Nissan Motor Co. with partner Dongfeng Motor Group. As far as exports to emerging nations are concerned, where the country has trade deficits, the Chinese government is taking a positive stand.

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