Year in Review: Maturing, multifaceted

China Daily motoring writer Han Tianyang takes a look back at what moved the market and made the news over the past 12 months

Mercedes-Benz is among the luxury carmakers showing robust growth in China. [Photo/China Daily]

 

Reports say the Shanghai brand will soon rise from the museum. [Photo/China Daily]

Cooling sales

After blistering growth in 2009 and 2010 that was mainly driven by government incentives on small cars, growth in China's auto market last year slowed to 2.5 percent as sales totaled 18.5 million units.

But it was still a record high, maintaining the country's position as the world's largest car market for a third consecutive year.

The cooling trend continued in the first quarter of this year, when vehicle sales actually declined 3.4 percent to about 4.8 million units, according to China Association of Automobile Manufacturers.

Passenger vehicle deliveries from January to March decreased by 1.25 percent from a year ago to about 3.8 million, while sales of commercial vehicles fell 10.6 percent to 1 million.

The decline in the first quarter was due to a slowing economy and a high baseline from the first quarter last year, the association said, forecasting that market will still likely register growth for the full year.

Govt procurement

In February, China's Ministry of Industry and Information Technology issued a preliminary list of more than 400 vehicles eligible for purchase by government offices this year. The catalog contains solely domestic brands, without any imported or locally made foreign brands listed.

The move followed a policy released last year stipulating that official cars should have engines smaller than 1.8 liters and with a price ceiling of 180,000 yuan. The regulation was expected to benefit domestic brands, as most are smaller and cheaper than their joint venture-made counterparts.

Analysts said the new policies show strong support by the Chinese government for homegrown carmakers, noting that a government fleet of domestic cars would set an example of consumer confidence in local brands.

Chinese-brand cars now account for less than a third of overall sales as Sino-foreign joint ventures continue to dominate the market

Chery-JLR partnership

Jaguar Land Rover, the British manufacturer of premium SUVs and cars, is about to join the majority of foreign brands sold in China by producing vehicles locally to lower costs and boost sales.

It has signed an agreement with Chery to set up an equal partnership joint venture in China, both companies announced in March. The plan is still awaiting approval from regulators.

The proposed joint venture plans to make Jaguar Land Rover SUVs and joint venture-branded vehicles. It will also establish a research and development facility and an engine plant.

Terms and conditions of the agreement were not disclosed, but Chinese media reported the joint venture based in Changshu, Jiangsu province near Shanghai will require an estimated 17.5 billion yuan in investment and is scheduled to be ready in 2014.

Observers said lost-cost carmaker Chery could improve profitability and know-how by making more sophisticated vehicles, while Jaguar Land Rover would be able to further tap increasing demand for premium SUVs in China. Either the Freelander or Evoque - the only two compact options in the British company's product lineup - will likely be produced first at the local venture.