China enters a new era as automakers vie to break new sales records

Shanghai January 14 (Gasgoo.com) As the curtain falls on 2010, the Chinese automobile market once again takes its place leading the world with a total sales result of over 18 million vehicles.

Its hard to imagine now that there was once a time when selling one million vehicles was the goal Chinese automakers dreamed to attain.

Then in 2009, SGWM became the first domestic manufacturer to break the million car barrier. At its peak an SGWM car was sold within five seconds.

Nowadays, automobile giants around the world can only raise their heads in amazement as one million vehicles gradually changes from a historic milestone to a common standard by which companies selling in China measure themselves.

"In three years, all major Chinese automakers will pass the one million car mark," automobile analyst Jia Xinguang writes in his blog. He believes that the Chinese automobile industry has entered a new age. "Systematic expansion helps to increase enterprises' research capability, management standards and brand influence."
 
According to surveys carried out within the auto industry, domestic sales of passenger vehicles looks to hit 23.2 million units, over 150% then all automobile sales two years ago.

Successful manufacturers set their sights even higher

China's domestic manufacturers released their 2010 sales reports not long ago. According to statistical data, Shanghai GM Motors saw an increase of 42.8% from the previous year, with a total result of 1,038,988 vehicles sold. Among its brands Buick, Chevrolet and Cadillac made impressive figures of 550,014 vehicles (a 23% increase in sales from 2009), 471,575 vehicles (73% up from 2009) and 17,366 vehicles (139% increase), respectively. Additionally, the Chevrolet brand experienced lightening growth in brand recognition, jumping up to 99%.

Meanwhile, Shanghai VW also had plenty of reason to celebrate the end of the year, as both their 2010 production and sales numbers crossed the one million mark. Among their successes, Shanghai VW’s Skoda brand deserves special attention, with total sales that year reaching 200,000 units and market recognition reaching 31%, a 90% increase from 2008. Additionally, the percentage of consumer intending to purchase a Skoda also rose, increasing from 17% in 2008 to 29%.

A key factor driving the surge in SGWM’s compact sales was the government’s preferential policies promoting rapid development in the rural marketplace. The company took advantage of its superior position in regards to production, sales, after-sales service, logistics and other aspects. I after having continually toiled away in the market for over a decade, had finally done what no other Chinese enterprise had done before. As the earliest foreign venture in the country, SGWM had undergone no small number of changes, beginning in 2004 when it offered its Yeti SUV and continuing all the way to 2010 when it finally entered the exclusive one million car club.

In the race to sell one million units, FAW Volkswagen unfortunately came across short due to insufficient production capability. Still, the company moved 198,000 Audi branded vehicles and 61,000 Volkswagens, with its VW brand creating a monthly record of 5.6% market share. With total sales of approximately 90,000 units, if FAW Volkswagen is able to maintain a growth of at least 10%, it should be able to become the fourth company to cross the million car threshold.

Also vying for a spot in the one million club are Dongfeng Nissan and Beijing Hyundai. Dongfeng Nissan, still among the top five sedan producers, is aiming for a 28.7% increase in sales this year (equivalent to 77,200 vehicles), above the overall industry standard. On the other hand, Beijing Hyundai, which is suffering from production limitations, has set its target at 72,000 units, the company's executive vice general manager Li Feng confirmed. "In order to produce the 8th generation Sonata, there is no choice but to halt production of the redesigned Sonata (Lingxiang)," Mr. Li added. The company has also admitted that its factory performs too slowly.

In addition, own brands are also taking part in the rush to reach a million sales, with many developers reevaluating their five-year targets. However the largest question remains how to ensure quality under the pressure to meet such high production goals.

Manufacturers take a more pragmatic approach in the new year

Despite the influence of government policies and the strain left from the financial crisis, the majority of auto manufacturers are increasing their 2011 goals. However, it is clear that there has been a shift towards a slightly more subtle direction.

FAW Toyota, despite still rearing from the recall scandal in 2010, still managed to fulfill its yearly sales target. However, the company set a modest growth target of 10% for 2011.

This has been the case across the whole industry. Shanghai GM, Beijing Hyundai and Dongfeng Honda have also set their expectations for 2011 to fairly low 10% (1.15m vehicles), 3% (72,000 vehicles) and 8% (28,000 vehicles) growth rates, respectively.

Among own brands, the prospects are most optimistic, with Chery hoping for sales of 900,000 vehicles (an increase of 30%.) BYD, on the other hand, is setting it sights much lower to 600,000 vehicles (200,000 lower then its original target.)