Asia-Pacific: China a decade ahead of India

　　Shanghai R & D center, the biggest one outside North America, invested 30 million Yuan by of Borg Warner opened in February 22.Tin Manganello told reporters that the decision of this investment was made at the risk of financial crisis.

　　Since last year, auto enterprises including Volkswagen, General Motors have continuously cleared the investment strategy to invest in China and rely deeply on China auto market. At the same time, emerging markets including Brazil and India has also been popular with auto and parts enterprises. For example, GM and its China JV partner SAIC made a decision to explore the Indian market jointly last year.

　　The U.S. autos are crashing down while China auto market is more likely building up a psychological defensive line for the entire auto industry although in the second half of 2008 China auto market was rather flat due to the negative impacts of the global financial crisis.

　　However, a series of simulative policies as an important means to maintain economic growth introduced by Chinese government in 2009 have led to rapid growth in China auto market and benefited independent auto enterprises of which low-end and low-emission self-owned brands are the biggest beneficiaries. The sales are the direct reflection of all these favorable policies.

　　With a sales volume of 13.6 million units, China auto market topped the global new car market in 2009 for the first time. Meanwhile, the growth rate of China in 2009 exceeded 35%. Overtaking Germany for the first time, China became the largest market of Volkswagen Group and save its earning directly. China auto market brings about great hope for both multinational companies and more and more local independent brands.

　　Self-owned brands have long been considered the main cause of price cuts of China automobile. However, self-owned brands have not fared well over the past since the orientation of low-end models could only bring about meager returns. Seizing this good opportunity, self-owned brands has already taken 2010 the beginning of the battle to accumulate energy as well as improve quality management, strengthen the supply chain advantages and enhance brand image, and gradually expand to intermediate models area that foreign brands are good at.

　　According to a vast majority of respondents, for a long time, independent brands and foreign brands has been fighting to enter each other’s territory. Foreign brands hope to gained greater achievements in the low-end models as well as second and third line regions while independent brands want to be successful in the mid-class car field by working hard to enhance the brand image, quality and technical level. This time’s crisis has given a good chance to independent brands to narrow down the gap between international brands in terms of competition.

　　During the current round of auto industrial adjustment triggered by financial crisis, participants in Chinese market, that is to say these international auto enterprises, will have different judgments about the future expectation. Although all these enterprises are paying more attention to the China auto market, different companies varies in the extent of concerns and urgency. In addition, to increase the production of small cars and low-end cars as well as speed up to expand to second and third line cities and apply more local suppliers are the major strategic choice of multinational auto firms.

　　The future performance of China’s auto market, to a large extent, will cause a chain reaction to affect the global giants’ confidence to emerging markets such as India and Brazil. According to reporters’ field visits and interviews with relevant institutions, India’s population has already exceeded 1.2 billion in 2009. Besides, its annual GDP growths are all reached 8% in recent years. Even if now in India is a per-capita monthly income is less than 100 U.S. dollars, an enormous population and people’s optimistic expectations on the economy lead to a high auto popularity rate in large cities such as Delhi and Mumbai, especially A-class vehicles.

　　Some experts predict that by 2020 India’s GDP will get close to that of China in 2008. Simply speaking, China’s economy is 13 years ahead of India’s. Currently, India’s car sales volume is not large, but the growth is quite rapid. The annual growth rate of mini-cars is 20%. It is inexplicable that such a figure is achieved on the condition of pedestrians and vehicles mixed roads (even cow prowl sometimes) and a large number of one-way streets spread in many Indian cities.

　　Suzuki is India’s first major car brands, accounting for 35% market share. The older generation of Alto and a new generation of Swift are very popular in cities such as Delhi and Mumbai. Hyundai is in the second place. Small private cars such Hyundai Suzuki and Honda can be seen everywhere in Delhi streets, which easily reminds people of the sight that Xiali and Santana spread all over in China in 1990s. And it is true. The domestic A-Class Elantra is defined as executive-level commercial vehicle used by Government officials and business senior executives in India, similar to the role of Santana in China 10 years ago.

　　Diffident from frequently price cuts of Chinese auto manufactures, the prices of cars in India are relatively stable. According to introduction of local dealers, basically prices are published once a year by the local auto manufacturers and must be reported to the relevant departments to be served as records. Once settled down, the prices should never be changed. Therefore, although competitions among different brands exist, there are no price wars. Since Prices can not fluctuate with the market, competitions in India are naturally not as fierce as in China market. So it is not overstated to say Chinese auto market a decade ahead of India.

　　(Translator: yalong/ Jessie)

　　See original Chinese report Please click: http://auto.sohu.com/20100324/n271049500.shtml