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.
