Mon, Feb 20, 2012 - Page 10 News List

Chinese auto firms buy into European markets


Chinese automakers have returned in force to Europe, buying up brands and plants after earlier efforts to get a foothold in one of the world’s largest car markets failed.

Great Wall Motor (長城汽車) is the latest Chinese entrant, with production at its plant in Bulgaria scheduled to start tomorrow, giving it access to the European market of about 500 million people with a very competitive line up which could give Europe’s established firms pause for thought.

Prices for its base Voleex C10 model, the Steed 5 pick-up and Hoover H5 four-by-four run from just 8,000 euros to 14,700 euros (US$10,600 to US$19,400) and the company, which has 10 sites in China, says is aiming to produce 500,000 vehicles overseas by 2015.

Analysts have said that while it might be considered surprising Chinese firms are so determined to get into Europe, a saturated market where car sales are declining, there are benefits for them, especially in terms of branding and prestige.

“It is a way for them to make progress in quality levels,” said Yann Lacroix, an analyst at Euler Hermes in Paris.

In Britain, Geely Motors (吉利汽車) plans to start selling a mid-range sedan by the end of the year at a very competitive £10,000 (US$15,460).

Announcing the move in December, the company, which owns Sweden’s Volvo Cars, said “the leaps and bounds made in manufacturing mean that China’s car makers are rapidly closely the gap with Europe’s establishment. We will be aiming to widen our range just as quickly as possible, probably at least a new model range every year for the next four to five years.”

Reflecting the growing global ambitions of Chinese automakers, Geely bought Volvo from US auto giant Ford for US$1.5 billion in 2010, less than a quarter of what Ford paid for the company in 1999.

“In that way, the company made a very significant technological jump,” Lacroix said.

Meanwhile, China’s largest home-grown carmaker Chery Automobile (奇瑞汽車) has established a base in Italy with local company DR Motor and at the end of last year bought a Fiat plant at Termini Imerese in Sicily.

Chery is developing its own marque for Europe, Qoros, in cooperation with an Israeli company which should make its first model next year.

Chinese auto companies have also shown an interest in acquiring European firms that have run into hard times as their home markets falter.

Beijing Automotive Industry Holding Co (北京汽車工業控股) expressed an interest in acquiring General Motors’ European operations grouped in the Opel business as the US motor giant collapsed into bankruptcy and has only just emerged.

In the event, GM — which has large Chinese operations of its own — turned down the sale on concerns about technology transfer and decided to keep Opel.

Similarly, it refused to sell its Saab auto business to two Chinese firms — Youngman (中國青年汽車集團), a constructor, and distributor Pang Da (龐大) — with the unit eventually being taken on by a Dutch group before it failed and was forced to file for bankruptcy in December.

Swedish press reports have said Youngman might still be interested in buying the company and be ready to make a multi--million US dollar bid.

Youngman was interested in snapping up Saab before it declared bankruptcy, but its efforts were thwarted by GM, which balked at transferring the necessary technology licenses.

Analysts said that Chinese manufacturers got off to a bad start in Europe in their first efforts as critics highlighted safety concerns and lack of individual styling.

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