Analysis: Domestic manufacturers’ new luxury own brand ventures

Soon after news that Geely had debuted a new luxury own brand, Lynk & Co., rumors began surfacing that Great Wall would respond by announcing a luxury own brand of its own. Not long after Great Wall officially announced its new own brand, Wey. The brand will cover various transport tools and driverless technology. 

It is worth noting that new entry-luxury and luxury brands like Lynk & Co. and Wey are targeted at entirely different markets from previous own brands. Lynk & Co.’s launch was actually announced in Germany, with the aim of sending a message to both foreign automakers and a different class of consumers.

However there are concerns that own brands targeted at higher markets might be a bit too difficult for domestic manufacturers to handle, with several problems involving product planning, brand positioning and other market issues being unavoidable. However, as Wang Qiguo, professor at Peking University and Chinese brand analyst, remarked, whether or not these new own brands will succeed or not depends on whether manufacturers have taken customer demand into account.

Great Wall’s CEO Wei Jianjun has previously remarked that Great Wall will suffer if they fail to expand into the luxury automobile market. Changan President Zhu Huarong has also made similar remarks, despite the fact that the manufacturer’s plans are currently on hold due to resource limitations.

Domestic manufacturers have released a number of luxury models this year to test the waters, including the FAW Hongqi H7, Dongfeng A9, GAC Trumpchi GA8, Great Wall Haval H8 and Great Wall Haval H9. However these manufacturers have yet to make a considerable impact, with Hongqi sales over the first nine months of the year totaling 2,900 units, while sales of the Dongfeng A9 totaled 1,100 units over the same time period.

The own brand Qoros is no doubt where Geely and Great Wall have gotten their inspiration from. China Association of Automobile Manufacturers Deputy Secretary Dong Yang has previously praised Qoros, stating that it was a “major accomplishment for a Chinese brand.” However even after reducing prices and setting up mini 4S showrooms, Qoros has only managed to sell 150,000 units over the first nine months of the year. While that figure represents positive year-on-year sales growth, it is still far from impressive. Bi Xu, professor at Peking University and automobile sales expert, prescribes Qoros’ failure to lack of accurate brand positioning and pricing.

“Domestic manufacturers’ biggest challenge when entering the luxury automobile market is how to improve their brand reputation and get rid of the image of only being able to sell cheap cars,” explained automotive market analyst Xiao Mingchao. For domestic manufacturers to succeed in attracting luxury consumers requires that they prove that they can deliver competitive vehicles. 

China Passenger Car Association Secretary General Cui Dongshu also added that domestic manufacturers have to be very in tune with what the market demands so that their new own brands are able to provide models which are in line with consumer trends. He also points out that growth rates in the market may continue to slow in the future.

Still, at the end of the day Geely’s Lynk & Co. still seems to be a promising new venture due to its new concept and business model. Mr. Xiao commented that creating a new customer niche is crucial in revitalizing a company’s brand image.