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CHINA: "China’s Free Trade Agreements Unlocking the “Hidden” Cost Savings" report

CHINA: "China’s Free Trade Agreements Unlocking the “Hidden” Cost Savings" report. 5-page report by Ernst & Young.

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back to index backCHINAtalk April,  2007

A New Era for Chinese Vehicle Manufacturers

Chinese vehicle manufacturers must develop a set of convincing strategies first, then make a quantum leap in key capabilities across the automotive value chain.

Recent announcements make it clear that Chinese vehicle manufacturers (VMs) intend to establish an international presence. Shanghai Automotive Industry Corporation (SAIC), Great Wall Motors, Lifan, Geely, Brilliance, and Chery, among others, have announced their plans to start exporting cars under their own brand names, or to establish production outside China.

However, there will be room for just a few globally successful Chinese VMs. The global auto industry will support only a limited number of players over the long term, due to the fundamental microeconomic pressure to build and maintain scale. Most of these positions are already occupied by capable competitors with huge stakes in the industry. Therefore, the white space” for Chinese VMs that seek to play at parity on the global stage is likely very limited and will be heavily contested by the leading domestic multiline players and niche players.

For Chinese VMs to succeed, they must embrace the changing structure of the industry and, more specifically, become much more competitive in those areas of the automotive value chain where future profitability is likely to be best, particularly distribution.

Booz Allen Hamilton's Ronald Haddock, Christian Koehler, and Edward Tse are the authors of "A New Era for Chinese Vehicle Manufacturers – Opportunities and Challenges for Chinese Automakers as They Expand Overseas."

To download 12-page document, please click here.

Source:     Booze Allen Hamilton - GAI

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