SHANGHAI - As
automobile consumption soars, China's vehicle
market will see fierce competition among both
domestic and foreign brands in the next few years,
according to a new report.
The fierce
competition primarily lies among some traditional
auto giants that have been losing some of their
market share in China in the past two years, said
the report by leading market research company
ACNeilsen.
According to the report, based
on surveys in Beijing, Shanghai and Guangzhou,
China's three commercial hubs, the market
share of German firm
Volkswagen suffered the sharpest decline, dropping
from 35% in 2004 to 23% in the three cities.
The report said the market share of
Shanghai General Motors increased by 1 percentage
point to 7% during the past two years.
ACNeilsen said the biggest winners in
China's auto market are Japanese cars, because
they are designed and developed to cater closely
to market needs, and their marketing strategies
are successful.
From 2004 to this year,
Toyota's market share in the three cities rose
from 1% to 7%. Honda also managed to seize 6% of
the market, though its market share was less than
1% in 2004.
Chinese domestic cars are also
acquiring larger market shares in China, said the
report. In Beijing, Shanghai and Guangzhou,
China-made Chery cars accounted for 5% of the auto
market.
ACNeilsen's view is echoed by
industry analysts.
Feng Fei, head of the
Industrial Economy Research Department of the
State Council's Development and Research Center,
said the competition in the domestic auto market
would become fierce in the next two to three years
and some auto makers may be eliminated.
Feng made the remark at the high-level
Innovation Forum on China's Auto Industry recently
held in Chongqing municipality.
Feng said
that since 2000, China's auto production has
reached overcapacity. At present there is not much
room for a price war, indicating that a
reshuffling of the auto sector is on the way.
Statistics show that car prices have
fallen since 2001 and various promotion activities
have resulted in heated competition in the
domestic auto market.
In recent years, the
price hike of such products as steel and rubber in
the upstream industries has increased the
production cost of auto-manufacturing enterprises.
Auto enterprises are facing the pressure of
cutting costs across the board.
Feng said
China's auto industry desperately needs core
technology amid the globalized competition in the
domestic auto market.
China produced and
sold more than 5.7 million cars in 2005, becoming
one of the world's largest car producers and
consumers. But of various new models on the
domestic market, 80% have been directly introduced
by foreign auto companies. This reflects the fact
that China's auto industry is fueled by foreign
investment and its research and development
capability is insufficient, said Feng.
Some industry insiders said that without
the participation of multinational auto companies,
it is difficult for China's auto industry to
achieve rapid technological leaps and management
upgrading.
However, multinational
companies still work to hinder domestic
enterprises in the designing and development of
car models, engines and gearboxes, and impose high
technical transfer and design fees. They also make
it difficult to purchase key equipment and spare
parts.
They not only control the technical
transfer of Sino-foreign joint ventures, but also
weaken the technical development capability of the
Chinese side in joint ventures, making Chinese
partners fully dependent on the foreign side, said
Feng.
