China Forum Organizers Say Some Domestic Automakers to Prevail

WUHAN, China – Despite a sudden slide that has seen domestic automakers lose chunks of market share, organizers of the 2-day Global Automotive Forum (GAF) that opens here Thursday (Oct. 16) express confidence at least a few of the independents will weather the storm and emerge as global players.

Domestic brands have seen their share of industry new-vehicle sales plunge to about 38%, from 45% less than two years ago, industry insiders here say, as multinational marques have continued to gain ground, backed by increasing local capacity, more modern technology and better reputations for quality and performance.

A recent survey by Boston Consulting Group found 55% of Chinese who own a domestic-brand vehicle say they will purchase their next car from a multinational brand.

But Wang Xia, chairman of the China Council for the Promotion of International Trade’s Automotive Committee, one of the big forces behind the GAF, tells media at a pre-conference backgrounder he is confident there’s a future for at least some of the independents.

“This is a hot topic right now,” he says of the challenges facing the domestic brands. “The last 11-12 months have seen a decrease (in market share), and that is the challenge of the moment.

“But I believe, in the future, more than three Chinese leaders will emerge,” he adds, without identifying his list of frontrunners. “The past two years, the Chinese brands did a good job of growth. This year the focus is on transformation and upgrading – and they need to transform and upgrade.”

Jack Perkowski, founder and managing partner of JFP Holdings and longtime investor in the Chinese auto industry, agrees with Wang.

“They’re not doomed,” he tells WardsAuto. “I’m pretty high on the future of the domestic automakers. Am I positive they will all make it? No. But it will be more than two or three. There’s still big growth to come in the lower-priced segment.”

Perkowski, who also was involved in organizing this year’s GAF, says that as wealth trickles down to the masses, the market will grow for the domestic brands.

He points to projections that call for new-vehicle sales to reach 35 million annually by 2025, up from about 22 million units today. “As the base of the triangle gets bigger, local companies will do better.”

Perkowski puts Geely, which owns Volvo, and Great Wall among the survivors, but notes neither is close to being capable of competing with their namesake brands in more established markets, such as the U.S. or Western Europe.

“I think they’re concentrating more on (export) markets that look more like China – which is what they should be doing,” he says.

Several sessions at this year’s GAF will touch on issues related to the challenges and opportunities facing the domestic automakers. Among other topics to be covered is the rise in auto financing, the potential for self-driving vehicles, the future of new-energy vehicles and the impact of the Internet on the auto industry in China and around the world.

More than 1,000 industry executives and media representing 18 countries are expected to attend the fifth annual GAF here over the next two days.

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