BEIJING - There's no
tax on big talk, goes a Chinese saying, and many
indigenous car brands seem to have taken that
aphorism to heart.
BYD Auto, a small
privately owned carmaker that recently graduated
from making batteries, has grandly announced that
it aims to be a global auto champion by 2025 by
moving more than 13 million units a year. The only
problem is the Hong Kong-listed BYD sold a mere
60,000 cars last year, less than 0.7% of that of
Toyota, which has unseated General Motors to be
the world's top
carmaker this year.
Two years ago, Geely, another privately
owned Chinese carmaker, declared that it expects
to sell 2 million vehicles annually by 2015, with
two-thirds abroad. The company's 2006 sales stood
at 200,000 units.
Commenting on such
pompous boasts, Yale Zhang, director of Greater
China Vehicle Forecasts for US auto consultancy
CSM Worldwide Corp, says: "They are only trying to
grab publicity."
But Zhang is quick to add
that it's just "a matter of time" before one or
two local companies grow into globally competitive
brands, even if not as big as Toyota. "Yet it will
take them 20 to 30 years," Zhang predicts.
Most Chinese car brands have been making
rapid progress in recent years as a result of
rising prosperity and the consequent increase in
vehicle demand. According to Zhang, Chery, the top
Chinese nameplate in the passenger car sector, is
the most promising candidate to become a global
player. The company, based in the eastern city of
Wuhu, Anhui province, sold more than 300,000 units
last year.
A partner of Chrysler and Fiat,
Chery is widely seen to have the strongest
research and development capability, with the
biggest lineup among Chinese carmakers. It also
enjoys strong backing of the central government
and local authorities.
Chery has been
researching the success of Toyota, from product
portfolio, manufacturing, quality control and
cost-cutting to marketing, sales and overseas
expansion. "We will become a Chinese Toyota," it
declares.
Chery aims to boost its annual
sales to 1 million units by 2010, a much more
realistic goal than that of BYD or Geely. It also
plans to double the number of its overseas plants
to 14 and lift its sales abroad to 400,000 units
from 52,000 units last year.
Other Chinese
brands are also trying to follow the path of
Toyota. A top executive from Geely says: "In the
long term, we will have plants in all regions of
the world where Toyota has."
Growing
pains Despite fast growth, says Jia
Xinguang, an independent auto industry analyst
based in Beijing, indigenous brands are no match
for global giants in terms of research and
development, quality, financial power and
internationalization. Jia predicts the nearest
that the strongest Chinese brand will go to a
global nameplate in the next one or two decades is
French carmaker PSA Peugeot Citroen.
Chinese automakers mainly produce cheap
cars that are looked down on abroad in terms of
quality. This year, the Zhonghua sedan from
Brilliance China Auto, partner of German luxury
carmaker BMW, only achieved a rating of one star
out of five in a crash test by Germany's ADAC auto
club, a failure that made headlines in German
newspapers. This could well affect Brilliance's
plan to sell 158,000 own-brand sedans in Europe by
2011. Similarly, a Chery model has had a poor
crash test record in Russia.
Chinese
brands also face an increasing number of
intellectual property issues. The most recent case
is that of Shuanghuan Automobile, a small carmaker
in the northern city of Baoding. It was sued last
month in Germany by BMW, which claimed the Chinese
company's CEO model closely resembles a previous
version of its X5 sports utility vehicle.
Daimler also threatened to take legal
action against Shuanghuan, saying the latter's
Noble is a copy of its Smart Fortwo mini car. In
2004, Chery was accused by General Motors of
patent piracy. The previous year, Geely was sued
by Toyota for an alleged trademark infringement.
"Domestic carmakers should take quality
and intellectual property issues more seriously.
Otherwise, their brand image will be ruined,
especially in the Western market," Jia says.
Breaking new ground, BYD is betting big on
electrical cars to dodge the fierce competition in
conventional vehicles. The company says it will
put a mid-sized F6 model with a petrol engine as
well as rechargeable batteries into commercial
production in the second half of next year. It
will also start making purely electric cars in
2009.
"Electric cars will be the trump
card for us in the global arena. We expect them to
account for half of our total sales by 2015," says
Xia Zhibing, BYD's sales chief.
According
to the company's data, F6 will have a maximum
mileage of 400 kilometers and a top speed of 160
kilometers per hour if it uses batteries only.
However, Jia warns BYD's drive to go
electric runs a higher risk as the quality and
reliability of electric cars are yet to be
established and it's not clear how the buyers will
accept the "green" vehicles.
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