ESTABLISHED western car-makers have long been wary of a sales tsunami from the Chinese, wondering when, rather than if, Chinese manufacturers will replicate the achievements of the Korean and Japanese car industries before them.
The Chinese have already had a measure of success in this country.
Great Wall was launched in Australia in June 2009 by independent importer Ateco, and went gangbusters for a while in the utility and SUV segments. Well over 40,000 vehicles were sold across five years at a running rate approaching 12,000 per annum in 2012.
Other Chinese brands including Chery, Foton, Geely and the recently relaunched MG have since tried to make a start, but haven’t come close to matching those numbers. Great Wall has subsequently been reborn as a factory-backed operation, along with its spin-off, the Haval SUV brand, but hasn’t yet troubled the scorers much.
Chinese cars will succeed when the fundamentals of their offer are correct.
The product has to be good, or at least good enough. The better Chinese brands are already there in this regard with warranty rates comparable to similarly-specced Korean or Japanese vehicles.
Early Chinese cars were sometimes confronting in their lack of refinement. Chronic turbo lag coupled with kidney bruising suspension made for an unpleasant drive. The more recent offerings are light years better.
The main disqualifier with Chinese vehicles remains safety. Life-saving features taken for granted in the West are not required in the Chinese domestic market and hence do not feature large on their manufacturers’ development lists.
Chery J3
Even so, five-star safety ratings are typically of more interest to ANCAP and motoring journalists than most of the general public, particularly when it comes to commercial vehicles.
Many people will buy regardless of safety concerns but the price has to be right.
Historically, new market entrants to the car business compete on price. This is as fundamental as the law of gravity. All else being equal, people will give a new brand a go but it has to be a genuine bargain.
Arriving in a new market with an unknown product, announcing that it is “premium quality” and seeking to charge as much or more for it as the established players will not work.
What will help is a well-marketed, catchy brand name; one that rolls easily off a Western tongue. More than one Chinese car company has created a brand name to sound good in English, Geely with “Lynk & Co” being the most recent example.
Market entrants typically don’t have the cash for big budget ad campaigns on national TV so their marketing has to be carefully targeted. Clever, consistent and informative material aligned to lower-cost media is where the successful begin.
Smart, effective dealers are as fundamental to success as the car, price or marketing. There is not much point in attracting potential customers to the dealership if there isn’t the requisite well-trained staff and facilities to greet them.
It is a matter of credibility. Customers might well buy an established brand name car from under a tent with a cardboard sign, but your unknown brand had better be parked in an impressive showroom with at least one full-time sales person on hand to extol its virtues.
Haval H6
Nor is there any return in generating fleet leads that no-one bothers to follow-up, or web traffic if there’s no-one available to chat.
The number and location of dealers is certainly important, but having 40 that have invested in facilities and staff is a better bet than having double that number of lifestyle dealers who are just along for the ride.
Well-priced, reasonable quality Chinese cars offered from a national network with sensible marketing support will sell in the West. Great Wall proved that, at least for a time.
Achieving mainstream acceptance of Chinese cars won’t be easy, and one of the biggest obstacles to getting the fundamentals right is the Chinese themselves.
Language and cultural differences are often magnified by business practices less predictable than most in the West are used to.
There is, however, the odd positive sign.
SAIC, one of the grown-ups of the of Chinese car industry, is slowly but surely gaining ground here with its LDV commercial brand.
People seem more likely to gamble on an unknown brand when shopping for a commercial rather than a passenger vehicle. It is likely the first Chinese manufacturer to gain mainstream acceptance in the West will build its reputation with strong commercial sales and then migrate its efforts to passenger cars.
Disclosure: Daniel Cotterill is a former PR manager for many of the brands mentioned in this article including Chery, Foton, Great Wall and LDV.
Comment by Daniel Cotterill
Great Wall Steed
Big groups wait and see on Chinese brands
By John Mellor
DEALERS considering adopting Chinese franchises could take a leaf out of the books of the bigger dealer groups in Australia.
A review of the brand portfolios of the big groups shows they generally avoid any exposure to newcomers from China.
In several discussions with various top managers in these groups, the thinking is that, for Chinese brands to be deemed to be worthwhile investments, they should be avoided until they are generating consistent profits and growth.
In these discussions the conversation generally comes around to the decades-long patchy performance of Hyundai dealers in the Australian market until recently.
Managers describe years of financial inconsistency with their Hyundai dealerships as the brand went through various phases from cheap and cheerful to a more mainstream brand but dealers paid the price of underwriting the growing prospects of the franchise along the way.
I remember one senior dealer group leader, when asked about whether his group would take on Great Wall back in the day, explaining that its Hyundai dealerships had staggered from year-to-year sometimes making meagre profits but more often than not making losses of varying magnitudes.
He said that the uncertainty continued for years before the brand came good and that, on balance, it had cost more than it made over the time.
His view was that it was best to let others become the pioneers with new Chinese brands and that, when they were proven to be consistently profitable, the time was then ripe to buy into the franchise.
By Daniel Cotterill on 3rd November 2016 Comment China Brands, Geely, GWM, Haval
ESTABLISHED western car-makers have long been wary of a sales tsunami from the Chinese, wondering when, rather than if, Chinese manufacturers will replicate the achievements of the Korean and Japanese car industries before them.
The Chinese have already had a measure of success in this country.
Great Wall was launched in Australia in June 2009 by independent importer Ateco, and went gangbusters for a while in the utility and SUV segments. Well over 40,000 vehicles were sold across five years at a running rate approaching 12,000 per annum in 2012.
Other Chinese brands including Chery, Foton, Geely and the recently relaunched MG have since tried to make a start, but haven’t come close to matching those numbers. Great Wall has subsequently been reborn as a factory-backed operation, along with its spin-off, the Haval SUV brand, but hasn’t yet troubled the scorers much.
Chinese cars will succeed when the fundamentals of their offer are correct.
The product has to be good, or at least good enough. The better Chinese brands are already there in this regard with warranty rates comparable to similarly-specced Korean or Japanese vehicles.
Early Chinese cars were sometimes confronting in their lack of refinement. Chronic turbo lag coupled with kidney bruising suspension made for an unpleasant drive. The more recent offerings are light years better.
The main disqualifier with Chinese vehicles remains safety. Life-saving features taken for granted in the West are not required in the Chinese domestic market and hence do not feature large on their manufacturers’ development lists.
Chery J3
Even so, five-star safety ratings are typically of more interest to ANCAP and motoring journalists than most of the general public, particularly when it comes to commercial vehicles.
Many people will buy regardless of safety concerns but the price has to be right.
Historically, new market entrants to the car business compete on price. This is as fundamental as the law of gravity. All else being equal, people will give a new brand a go but it has to be a genuine bargain.
Arriving in a new market with an unknown product, announcing that it is “premium quality” and seeking to charge as much or more for it as the established players will not work.
What will help is a well-marketed, catchy brand name; one that rolls easily off a Western tongue. More than one Chinese car company has created a brand name to sound good in English, Geely with “Lynk & Co” being the most recent example.
Market entrants typically don’t have the cash for big budget ad campaigns on national TV so their marketing has to be carefully targeted. Clever, consistent and informative material aligned to lower-cost media is where the successful begin.
Smart, effective dealers are as fundamental to success as the car, price or marketing. There is not much point in attracting potential customers to the dealership if there isn’t the requisite well-trained staff and facilities to greet them.
It is a matter of credibility. Customers might well buy an established brand name car from under a tent with a cardboard sign, but your unknown brand had better be parked in an impressive showroom with at least one full-time sales person on hand to extol its virtues.
Haval H6
Nor is there any return in generating fleet leads that no-one bothers to follow-up, or web traffic if there’s no-one available to chat.
The number and location of dealers is certainly important, but having 40 that have invested in facilities and staff is a better bet than having double that number of lifestyle dealers who are just along for the ride.
Well-priced, reasonable quality Chinese cars offered from a national network with sensible marketing support will sell in the West. Great Wall proved that, at least for a time.
Achieving mainstream acceptance of Chinese cars won’t be easy, and one of the biggest obstacles to getting the fundamentals right is the Chinese themselves.
Language and cultural differences are often magnified by business practices less predictable than most in the West are used to.
There is, however, the odd positive sign.
SAIC, one of the grown-ups of the of Chinese car industry, is slowly but surely gaining ground here with its LDV commercial brand.
People seem more likely to gamble on an unknown brand when shopping for a commercial rather than a passenger vehicle. It is likely the first Chinese manufacturer to gain mainstream acceptance in the West will build its reputation with strong commercial sales and then migrate its efforts to passenger cars.
Disclosure: Daniel Cotterill is a former PR manager for many of the brands mentioned in this article including Chery, Foton, Great Wall and LDV.
Comment by Daniel Cotterill
Great Wall Steed
Big groups wait and see on Chinese brands
By John Mellor
DEALERS considering adopting Chinese franchises could take a leaf out of the books of the bigger dealer groups in Australia.
A review of the brand portfolios of the big groups shows they generally avoid any exposure to newcomers from China.
In several discussions with various top managers in these groups, the thinking is that, for Chinese brands to be deemed to be worthwhile investments, they should be avoided until they are generating consistent profits and growth.
In these discussions the conversation generally comes around to the decades-long patchy performance of Hyundai dealers in the Australian market until recently.
Managers describe years of financial inconsistency with their Hyundai dealerships as the brand went through various phases from cheap and cheerful to a more mainstream brand but dealers paid the price of underwriting the growing prospects of the franchise along the way.
I remember one senior dealer group leader, when asked about whether his group would take on Great Wall back in the day, explaining that its Hyundai dealerships had staggered from year-to-year sometimes making meagre profits but more often than not making losses of varying magnitudes.
He said that the uncertainty continued for years before the brand came good and that, on balance, it had cost more than it made over the time.
His view was that it was best to let others become the pioneers with new Chinese brands and that, when they were proven to be consistently profitable, the time was then ripe to buy into the franchise.
By John Mellor
Great Wall Steed
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