Homegrown Brands and Models

Abstract

The year 2003 was a watershed in China’s automotive modernization, when the ratio of the output of MNC branded cars in China’s total output of passenger cars started on a downward trend, dropping from a high of 90 percent in 2002, to 76.4 percent in 2003, 66.71 percent in 2004, and 57.44 percent in 2005.¹ This shift was mainly due to the rapidly increasing production levels of two of China’s smaller independent automakers, namely Chery (Qirui) and Geely (Jili). The trend appeared likely to continue when in 2005, FAW and SAIC, the two most successful large Chinese automotive groups, announced ambitious plans to produce their own nationally branded car models. SAIC intended to produce 200,000 units of national models per annum by 2010, and FAW had a target of 800,000 national cars by the end of the Eleventh Five-Year Plan (2006–2010). Foreign observers were stunned at the Shanghai Auto Show in spring 2005, by the wide array of new independently designed car models and concept cars on display from Chinese firms such as Chery, Geely, and First Auto Works. In terms of sales, Chery had shocked both foreign and domestic observers when it announced that in 2003, it had sold 90,387 cars, more than a threefold increase from its start of sales in 2001, had already increased its production capacity to over 350,000 cars per year, exported 1200 cars that year, and was building an overseas production facility in Iran in 2003 that would have 50,000 vehicle production capacity.