Automakers look to drive sales overseas (2)

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Automakers look to drive sales overseas (2)

(China Daily) 09:19, September 03, 2013

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On the surface, it makes sense for Chinese automobile manufacturers to look to new markets.

Competition in China is intensifying and overcapacity among domestic makers is still a significant issue, according to a new report by international consultancy AlixPartners. Most Chinese manufacturers operate at 65 percent capacity, compared with the 80 percent considered to be the minimum for stable profits.

At the same time, Chinese automakers have struggled to gain market share, particularly in the key sedan segment. The only standout is Great Wall, which has a leading position in the China sport utility vehicle market, according to the report. In the luxury car segment, Bayerische Motoren Werke AG (BMW) and Audi AG lead the way, followed by Mercedes-Benz.

Dongfeng Motor Corp, China's second largest auto group, plans to boost sales abroad from 64,000 in 2011 to about 300,000 by 2016.

In October 2012, the Chongqing-based Lifan Industry Group announced plans to invest in its overseas operations to double exports to 120,000 by 2015. If the company meets that target, exports will account for about 40 percent of total sales and jump from around 53,000.

Zhejiang Geely Group, which has owned Volvo Car Corp since 2010, is looking to expand abroad rapidly. The company's exports in 2012 reached 100,000 vehicles, about 20 percent more than originally expected, mostly in Russia, Ukraine, Iraq and Saudi Arabia. By the end of this year, the company aims to export as many as 150,000 units.

"We will do everything in our power to explore overseas markets,"said Beijing Automotive Group Chairman Xu Heyi in a statement. By 2020, the company wants to earn $408 million in profits abroad.

In June, Beijing Auto announced an international strategy that would see the company's annual sales outside China jump to 400,000 vehicles by 2020. More than two-thirds of these cars would also be manufactured abroad.

SAIC Motor Corp acquired MG Motor in 2005. The company has plans to launch a joint venture in Thailand and to make its MG6 sports car and its Maxus commercial vehicles there as well. SAIC is China's largest automaker by sales and revenue.