Buick GL8, which is nearly means business MPV in China, is coming to its end of life-circle. Shanghai GM is going to replace it by a new model but to inherit the old product name. In the coming Beijing Auto Show, people can have look at the new generation of Buick full size MPV.

Buick GL8’s original model is OPEL Sintra which met quite a safety issue in Europe and was even forbidden to sell in some area of Europe. But the localized model is very successful since its beginning in 2000. Before Buick GL8 Chinese people only knows Van, and had clear definition for Van. GM in 2000 told Chinese customers that there is one more model named MPV which is good for business purpose in China and attracted over ten thousands customers for its first year. All these seemed happen over one night. In 2005 a new movement by Shanghai GM to GL8 again set a milestone for Chinese automotive marketers. GM introduced a new 2.5L engine and introduced a new brand name for its 3.0L models: Firstland. Chinese riches like First-everything, and after then, Buick GL8’s market share was as hard as stone. At present in high-end business MPV market which is around 50,000 in scale, Buick GL8 shares over 80%. Only some imported models can compete in segments above 400,000 RMB.

However successful a model ever was, when the time comes, newcomers will take its place. After ten years in China (2005 was only a facelift) Buick GL8 is coming to its end of life circle. GM has no new MPV model offer to Shanghai GM. This time a local designer’s layout was adopted. New model will be powered by GM’s power train and the new model has been tested in both north America and China. According to the latest news from Shanghai GM the new model will debut in Beijing Auto Show.

Frankly speaking, people are more interesting on how GM’s going to marketing the new model than the model itself. Shanghai GM is taken the top automaker in China for its marketing, but recent years the image changed for more and more international automakers are also performed not bad in this field. Shanghai GM definitely will try the best to promote its new Buick GL8 because both the joint venture and General Motor need the profit from GL8. GM can not fail this time.

Right before new GL8 launch to the market there will be another big dog hit market in the mid of 2010: Mercedes-Benz Viano and Vito. It will be an interesting event in China Auto Market.

In Feb.25^th, 2010, GM announced that the deal between GM and China TengZhong felled about acquisition of Hummer. In the following days, we saw different reaction from different sectors of the world. Some of them celebrated and the others showed their concern and pity. Who did win and who did lose in the failure of acquisition?

Will it benefit for the environment? Many people thought Hummer’s disappear would reduce the emission of pollution and it’s a good things for all over the world. In my opinions, the real results of Hummer’s disappear will not reduce pollution but increase it. It is obvious that the demand would not disappear with Hummer’s lost, and there are two influences, firstly, it will extend the using life of existing Hummer products, and as we know, old vehicles have a huge emission than a new one; secondly, it will encourage more and more companies to produce new products aim at taking place of Hummer, obviously, the technology of new products will be hard to surpass Hummer in a short time, and those products will emit more waste gas than Hummer’s products.

China government missed a good Chance to improve military vehicles. As we know, Hummer rooted from military vehicles of U.S. and till now Hummer equipping many high techniques exceeding military vehicles of many countries. Chinese military vehicles learned more technology from Toyota Cruiser, Hummer have advantages in the size, power and other’s aspects, if the acquisition were successful, China could improve its military and heavy vehicles in power, Size, passing ability and other aspects.

There was no doubt that GM was the biggest loser in abortion of Hummer acquisition. GM will continue to supply spare parts for existing Hummer products, and it will bear huge pressures from outsides and insides. GM announced that it will close step by step in the next months, and Hummer will disappear as Saturn.

Sichuan Tengzhong, a Chinese private enterprise and the last saver of Hummer, was the only winner in the gamble. Many analysts thought TengZhong made good use of the event to win more attention. There are three doubtful points; firstly, TengZhong did not have automobile production qualification; secondly, TengZhong challenged the policy bottom line in many times; thirdly, TengZhong did not apply for approve formally till now. I thought TengZhong as a winner following two reasons, the first one, If TengZhong succeeded to acquire Hummer, TengZhong would face disaster, it was not important that TengZhong did have automobile production qualification, but TengZhong also did not have ability to operate a world-wide famous auto brand as Hummer. Maybe TengZhong have enough capital to acquire Hummer, but the following operating capital would be more than acquisition, at the same time, human resources would be another limited barrier for TengZhong. In sum, TengZhong avoided a dangerous adventure. The second reason was that TengZhong won comprehensive awareness in the world wide through planning to acquire Hummer. TengZhong only paid about 2 million USD as bid bond, but TengZhong turned from nobody knows Chinese company to world-wide focusing on company, what a huge changes for TengZhong.

I was sad for Hummer’s lost, because it’s my dreaming car for a long time, and I think many boys and men have the same dream as me. When the acquisition failed, Hummer’s price rose in the past days, which was not a good news for who wanted to own a Hummer in the future.

The financial crisis from 2008 offered a great chance for Toyota to top GM and became the biggest automaker in the world. But when the whole industry is stepping out of the crisis, Toyota is facing the biggest recall problem in history. 

Anyone wants to know the actual effect to Toyota? Maybe Chins and US are two of the best places to demonstrate this. China just knows overtake US as the biggest auto market in the world and was taken as the fast growing force in the global auto industry. US are still the biggest source of profit to Toyota and also the biggest overseas market for both Toyota and its luxury brand Lexus. 

If you go to US or China to see the two different auto market, you may draw difference conclusion this time than before. First even Toyota is in deep trouble but people don’t believe the market will abandon the Japanese automaker. Toyota’s huge reservation is effecting still. Second, recall crisis is wide spreading globally but in China the situation is quite different.  In China most Toyota dealers won’t think the recall crisis will put big impact to the brand for in China so far, there is no such a similar case happened in the country. Data from CAAM shows that he most popular Toyota sedans in China are Corolla and Camry, both of them are in top10 best selling cars in Jan. 2010 China. On the other hand the only model covered by the global recall campaign is RAV4 which also made a 13% increase on last month in January.   

From 2.37 millions of cars sales in 2001 to 13.64 millions of cars sale in 2009, China auto market grew very quickly. In 2001, China auto sales only ranked No. 4 in the world auto market, but in 2009, China auto market has become the biggest auto market in the world. Some China auto experts predicted that by 2012, China auto productivity will be over 20 millions of cars, which is almost equal to twice of 2009 sales. 

Facing this situation in China auto market, should we be optimistic or pessimistic for the future of China auto market? 

Almost all of China automakers are optimistic.  

By February 2010, the main China independent brand automakers such as BYD, Chery, Geely, Brilliance Auto, and Great Wall etc., have already set the basic auto sales target in 2010 and almost all of growth rates are more than 20%. And they have begun to actively expand their productivity.  

BYD (BYD Company Limited) sales growth target is close to 100%, the auto sales target is 800,000 cars from 448,400 cars in 2009. 

Chery (Chery Automobile Co., Ltd.) sales growth target is 40%, the auto sales target is 700,000 cars from 500,300 cars in 2009. 

Brilliance Auto (Brilliance China Automotive Group Holdings Co., Ltd.) sales growth target is 43.7%, the auto sales target is 500,000 cars from 348,000 cars in 2009. 

Geely (Zhejiang Geely Holding Group Co., Ltd.) sales growth target is 25.2%, the auto sales target is 412,000 cars from 329,100 cars in 2009. 

Great Wall (Great Wall Motor Co., Ltd.) sales growth target is 77.8%, the auto sales target is 400,000 cars from 225,000 cars in 2009. 

At the same time, currently, the main joint ventures including DFM Nissan, Shanghai GM, GAIG Honda and DFM Honda etc. have announced a new auto productivity expansion plan, and FAW - Volkswagen is also actively looking for the place to expand its auto productivity in China Southern auto market.   

But some China auto experts are not so optimistic for 2010 China auto market. 

On the one hand, in 2009 the 13.64 millions of China cars means than the need of consumers in China auto market have been largely released because of the deep stimulus of good policies. On the other hand, China government’s stimulus policies of auto purchasing in 2010 have become weak. From January 2010, China government began to adjust the purchase tax subsidy of 1.6-liter and below passenger cars from 5% to 2.5%, so some China auto experts concerned that the reduced purchase tax subsidy will lower China auto consumers enthusiasm to buy a car. Meanwhile, the 1.6 liter and below passenger cars are the absolutely models in current China auto market, so their sales volume determines the level of overall sales of China auto market. So some China auto experts predicted that the sales volumes of most of China automakers will drop down in January this year comparing with the auto sales peak in December 2009.   But the real performance in January 2010 is not as people estimated. In January 2010, according to the latest statistics from CAAM (China Association of Automobile Manufacturers), China auto production and sales in January achieved 1.6148 million cars and 1.6642 million cars, respectively up 5% and 17% than last month. Both China auto production and sales created new high records. Due to a lower auto sales level in January 2009, China auto production and sales in January 2010 increased an even greater rate respectively, 143% and 124%. At the same time, almost all China automakers’ auto sales in January 2010 have gotten big growth. 

Why did China auto market in January 2010 boom so much?
 

I think there are three reasons. The first reason is that China current macroeconomic situation is improved continuously, people’s living standard has been improved steadily, and cars demand is increased constantly. The second reason is that although China government’s auto stimulus policies in 2010 are not better than in 2009, China government still has implemented a series of promotion policies on China auto industry including the 2.5% purchase tax subsidy of 1.6-liter and below passenger cars and countryside sales subsidy etc. which still boosted China car consumption. The third reason is that last year’s strong auto demand deferred in January 2010, so most of auto sales in January 2010 were the orders in 2009 which can not been delivered in 2009.
 
But I think if we become very optimistic for China auto sales of the whole year only because of the booming in January, it is not very suitable. The sales condition in January can not explain the full year. On the one hand, actually China auto demand has been largely released. On the other hand, 2010 China macroeconomic situation still has many uncertain factors, economic development is still difficult, and the development of China automotive industry is still needed time to see. At the same time, China auto exports are not so good. According to the latest statistics from CAAM, in January 2010, China automakers exported 37,700 cars, down 24% than last month.    More information, please click, China Independent Auto Brands to Expand Rapidly in 2010,  China Auto Monthly Sales Create another New Record, 1.6642 Million Cars,   China Auto Export Down 24% in January 2010.                      

On February 3rd, 2009, because of the serious brake system security risks, Toyota Motor announced that from February 28th, Toyota Motor began recalling China city utility vehicle RAV4 produced by Toyota China Tianjin factory, which are a total of 75552 cars produced from March 19th, 2009 to January 25^th, 2010.

It is reported that Toyota Motor has recalled more than 7.7 million cars, exceeding its annual cars production in 2009.As one of the most famous world automakers, although the recall shows Toyota Motor is a responsible automaker, the Toyota Motor’s big Recall still brought very bad effects for itself. 

First, on the surface, Toyota Motor has to spend a lot of money to repair so many recalled cars. Of course, for Toyota Motor, the lucrative international great automakers, such money is negligible. The most important loss is Toyota Motor’s reputation loss.

Second, the Toyota Motor’s Recall made Toyota’s car sales in China fell out of the top ten. According to China car brand data in January 2010 from CAAM (China Association of Automobile Manufactures), Toyota brand car sales can not enter the top ten sales lists for the first time. The Toyota model entering the lists in the latest time is Toyota Corolla model, which in December 2009 ranked No. 10 in the lists with sales of 16,500 cars. Affected by this Recall, Toyota’s joint venture partner in China, FAW Toyota’s passenger car sales declined slightly from 45,300 cars in December 2009 to 44,700 cars in January 2010. 

No.5 Jianghuai Auto company (JAC) set sales target of 500,000 units in 2010
 

Plans：China Jianghuai Auto company(JAC) looked forward to sell 500,000 units in 2010, including 300,000 unit passenger cars (included Refine, mid-size van) with a growth rate of 150%. JAC will launch three new developing products in 2010; they are JAC BSUV, Rein 2010, A0 sedan JAC YueYue. At the same time, JAC will launch new generation products of existing products such as Refine, Bingyue,Tongyue. Furthermore,JAC is constructing BMPV project with yearly capacity of 60,000 units; after accomplishing this project, JAC would cover high, medium, low end MPV market in the future.
 

Comments: in 2009, JAC sold more than 310,000 in total, increased by 55.7%; Commercial vehicles still was the majority, sold more than 190,000 units with a growth rate of 33%; it was the beginning of expanding to passenger car market, JAC launched Heyue and enriched existing brands with new models, as a result of those efforts, JAC harvested in passenger car, sold more than 120,000 units and doubled sales volume in 2008. It’s obviously that JAC changed its strategy in 2009, and allocated more resources to develop passenger car. From the market performances of JAC passenger car in 2009, we have confidence to forecast it would continue growing in 2010 with a double digit growth rate. Mid-size Van, Refine, probably raise to 55,000 units by 20%; SUV Rein continue increasing by 20% to 14,000 units; and then if JAC wished to sold 300,000 unit passenger car in 2010, JAC should sold 230,000 unit sedan in 2010,increase by 250%. Considering the macro-environment, I thought this plan was a bit aggressive for passenger car, on the contrary, I thought JAC was pessimistic on its commercial vehicles, which was its key competitive products in China, and Light duty truck had good reputations with low price and medium quality; it is possible to raise by 20% in CV, and the expecting sales volume reach 240,000 units. In sum, I thought it more reasonable that JAC sold 240,000 units CV and 200,000 units PV in 2010.
 

No.6 Brilliance Auto set sales target of 500,000 units in 2010
 

Plans: Brilliance Auto expect to sell 500,000 units, increase by 47% compared with that of 2009, the total export reach 50,000 units, and the revenue sum up to 60 billion RMB. Brilliance Auto will develop taxi in A classic working platform, and new model A4; at the same time, Brilliance Auto will launch new generation of Junjie, Hiace and other special vehicles in 2010.
 

Comments: in 2009, Brilliance Auto sold more than 340,000 units increased by 22%.  There were 43,700 units BMW, and more than 300,000 unit independent brand’s vehicle. Compared with other independent automakers, Brilliance Auto’s performance in 2009 disappointed its shareholders; it lost a good opportunity to expand its productivity. Despite its compact car FRV tripled to 80,000 units, Zhonghua , Brilliance Auto main product, declined sharply in 2009, at the same time, new product did not bring sales volume for Brilliance, for example, FSV, BaDao and etc. and Commercial Vehicle only had a growth rate of 16%, lower than the average of industry. I was not optimistic with Brilliance’s performance in 2009, however, Brilliance auto has its special advantages to enhance its confidence to 2010, as reported that Brilliance auto was the richest in cooperation with international multi-national auto manufacturers, first one was BMW, and from 2010, Brilliance will speed up to cooperate with Toyota and Benz to develop special vehicles. Brilliance announced that it will finance 3 billion RMB in 2010, and each year invests more than 0.7 billion in R&D. sum in a word, I thought Brilliance have a bright future in recent year, but 500,000 units sales targets still looking so aggressive.
 

To be continued…..

No.3 Geely Sales set target of 400,000 units in 2010 

Plans: Geely released its sales target of 2010 in December, 2009, and the sales target is 400,000 units, increase by 33% compared with 2009. As schedule, Geely will launch four new products, including Panda Cross, Global Hawk Gx-718, and A0 sedan GC515, GC515-RV. 

Comments: Geely sold almost 280,000 units in 2009, increased by 50% compared with 180,000 units in 2008.Lc-1, Jingying and vision were the top three model with high growth rate in 2009, respectively increased by 14 times, 130%, 80%. And Freedom Cruiser still was the major model of Geely and sold more than 110,000 units and occupied more than 40 percentage of the total sales volume in 2009. I don’t think new models can bring such huge growth in number. Geely refreshed more and more sub-brands in recent year, but not all brands were accepted by customers and in 2009, Geely stil relied most on the old model such as Freedom Cruiser, Jingang. However, I think Geely would benefit from Volvo acquisition. Firstly, if Volvo sales were included in sales targets, the targets would be easy to reach, because the Volvo sales in 2009 was more than 300,000 units in the world; secondly, by acquiring Volvo, Geely can improve its product quality in safety and other aspects; thirdly, Geely can benefit with high exposure in the medias, and it is helpful to build Geely brand image in global market. 

No.4 Chery, set sales target of 700,000 units in 2010 

Plans: Chery is planning to sold 500,000 units in 2010, increase by 40% y-o-y. And Chery is about to launch 17 new products, including 12 new developing products and 5 new generations of existing products. New developing products are rich in type, include A5, ISG, M11, ISG and other hybrid electric vehicles; the BEV of S18, QQ, Tiger will launch in 2010 successively. 

Comments: in 2009, Chery sold more than 480,000 unit passenger vehicles and 17,000 unit commercial vehicles, increased by 36%, 800% respectively. Chery had set a previous sales target of 500,000 units for 2010, but the total sales volume of 2009 had reached that target, and then Chery adjusted its sales targets for 2010. Chery is different with Geely, Chery insisted on independent development and research, and in 2009, Chery started its new strategy of multi-brands strategy, Chery aligned its products into four brands, Chery, RIICh, Rely and Karry. Different brand aimed at different segment market, for example, RIICH position medium-high end sedan market, brand’s spirit is vision, courage and victory, while Karry is a commercial vehicle brand. Multi-brands strategy was beneficial for Chery improving its brand value. And Chery set four independent sales companies to operate different brand. All of those measures can bring Chery high growth in recent year, but I thought there also are many challenges for Chery, for example, how to improve its operation efficiency and how to manage its huge dealerships. Furthermore, most of new products in 2010 are new energy vehicles, which can bring Chery awareness but not sales volume at the same time. In my opinions, it will be more realistic that Chery set its sales targets in 2010 closing to 600,000 units and increase by 20%. 

To be continued……

China independent automakers obtained great achievements in 2009, and auto market boom gave more confidence to China automakers whatever they are independent brand or joint-ventures. Most of China independent automakers released their plans for 2010, Is those plans reasonable or practicable? I would like to give some insights on the majority of China independent automakers’ plans.

No.1 BYD, sales target of 2010: 800,000 units

Plan: BYD is planning to accomplish 800,000 unit production and sales, increase by 100%. BYD will launch many new products pricing between 100,000 RMB and 200,000 RMB, and improve the quality of product. BYD new products include MPV-M6, Luxury sedan-G6, SUV-S6, BYD i3, BYD i6. And the classified plans as following: F3 is 270,000 units; F6 is 100,000 units; F0 is 150,000 units; G3 is 100,000 units; new products i3, i6, G6, M6, S6 are 170,000 units; and new energy vehicle F3DM and coupe are 10,000 units. 

Comments: in 2009, BYD seized the opportunities of small displacements, and made great achievements in displacement of less than 1.6L sedan segments. And F3 became the best-selling model in China sedan market. But I thought BYD can achieve great performances thanks to many occasional factors, such as Macro-environment, government’s stimulus polices, and those factors would change in 2010. Another reason leading to success for BYD was Buffet’s investment in HK stock market, which made BYD attracting the attention from all over the world, but the effect will fade in 2010. BYD put more expectation on new products, 170,000 sales target for five new products is aggressive in my opinions, the price between 100,000 RMB and 200,000 RMB was the intensity competition segments, BYD will not only compete with independent brands competitors but also joint-ventures such as Honda, Toyota, Hyundai motors, and customers would worried about the quality and service of new models. 

No.2 Great Wall sales target of 400,000 units  

 Plans: Great Wall make multi-legs walking strategy for 2010, and is planning to sold 400,000 unit in 2010, increase by 77%. Great Wall will improve its market share in pick up, SUV and sedan segments. There are 5 new models being about to launch in 2010, three of them are family SUV Hover M2, medium SUV Hover H3 and Hover H5; the first type of sedan CH041 will come to market in 2010; the fifth new product is a medium-high end pickup Wingle 5. The classified plans are that sales target of SUV is 130,000 units, Sedan is 120,000 units, and pick up and others is 150,000 units. 

 Comments: in 2009, Great Wall sold more than 220,000 unit vehicles and increased by 77% compared with that of 2008. In domestic market, Great Wall increased by 155%, and the export volume and amounts still kept No.1 among independent brand automakers. Great Wall wish to keep 70% growth rate in 2010, I thought the plan is hard for Great Wall to touch, firstly, it will be unoptimistic for export, RMB has great probability to appreciate in 2010, which will continue do harm to the export of China independent brand automaker, include Great Wall; secondly, Great Wall meet more and more competition in SUV segments, Toyota RVA4 jumped to No.3 in 2009, very close to Great Wall, BYD,JMC, JAC and other independent automaker are planning to enter into SUV market; thirdly, Great Wall throw more expectation on sedans, but the brand still not accepted by customers, most of China customers thought Great Wall as a commercial vehicles manufacturer, and the quality and service need be tested in market. To be continued……  

Jiangling Motors independent brand‘s pick up, Baodian, had ever been the best selling diesel pick up in China, but its market share declined in recent year. Before 2003, there are few China auto manufacturers producing diesel pick up, and gasoline pickup accounted more than 70% market share. Jiangling Motors entered into diesel pickup and SUV segment by making good use of its advantages in diesel engine which equipped in its independent brand light duty truck rooted from ISUZU.  Market changed in recent year, diesel pickup and SUV became popular, more and more automaker enhance the R&D in diesel pickup SUV segment, for example, Great Wall, Foton. And Jiangling Baodian lost its market share thanking to its unchanged old figure and higher price compared with its rivals. 

Jiangling Motors and Ford set a new platform to produce a new series, N350, it’s the product researched and developed by Ford and Jiangling motors, and it will use new logo as an independent brand of Jiangling. Jiangling motors put high expectation on N350 series.  

The new SUV, named Yusheng which mean to drive forward win, looks like plumper than elder Baowei in the front face, also have a big full-size. The rear of Yusheng is more fashionable and has good beauty of body curves. And we can found there are huge improvements in the interior of Yusheng. Yusheng will equip Jiangling new generation diesel engine which match the national IV standard, and with the advantages of strong power, low noise and etc. as for price, it was forecasted about 100,000RMB-150,000RMB 

Despite of beautiful body line and powerful engine, but I am not very optimistic about YuSheng’s future, there are four worries about Jiangling Yusheng. Firstly, Jiangling Yusheng position in Medium-end segment of SUV, the market size was limited in China; Secondly, Yusheng will meet the fight back of GreatWall SAFE, Chery Tigger and other independent brand, and Jiangling Yusheng have no advantage in price; Thirdly, Jiangling Yusheng is difficult to enter into oversea market because its high price; Fourthly, Jiangling should make good arrange inter competition with Landwind; Fifthly, Jiangling motors has no successful experience in marketing SUV products.  At the same time, I thought Jiangling Yusheng will benefit from Jiangling’s good brand image and stable network in domestic market.  

SUV, Sport Utility Vehicle, this word for many auto consumers is an absolutely tempting word. SUV represents varied utilities and good driving experience, so in western countries, most of families buy a SUV as the second car.