Summary: The market success of China-specific automobile models

Statistics gathered by the China Passenger Car Association detailing sales volumes and growth rates passenger automobile models sold in the Chinese market last year have been officially released. Among the 20 best-selling models of last year were a handful of JV models designed specifically for and sold exclusively in China: Shanghai VW’s Lavida, Shanghai GM’s Excelle, FAW-VW’s Jetta, Changan Ford’s Escort, Shanghai VW’s New Santana and FAW-VW’s New Bora.

The sales of these vehicles are very astounding indeed. The six models’ average monthly sales last year were just under 19,000 units, with monthly sales of the highly popular Lavida averaging 40,000 units. The sales of this one model have been crucial in manufacturer FAW-VW’s impressive market success last year. German manufacturers as a whole did very well last year, with a total of 3.75 million units, or 31%, of all passenger automobiles sold in the country last year being German brand models.

Models targeted at the Chinese market tend to be built on obsolete platforms, which results in lower development costs. While the fact that they are built on discontinued platforms often irks some, the fact of the matter is these models are designed specifically to meet the unique demands of Chinese consumers. At the end of the day, manufacturers’ success in the Chinese automotive market, which is still relatively immature, is highly dependent on understanding the country’s peculiarities rather than raw technical prowess. Chinese consumers still regard the sedan primarily as a family vehicle, with many new households still only getting around to buying their first or second-ever vehicle. These consumers tend to not be concerned with factors like price, fuel consumption and performance, instead focusing on aspects like appearance, features and interior space.

An aspect of these models is the fact that only a few JVs offering them, while others don’t even have a single option on the market. As mentioned before, these models tend to be built on discontinued platforms. For example, the Lavida, Bora and New Santana are based on the PQ platform, while the Jetta and the Escort (Chinese version) were built on the A2 and C1 platforms, respectively. These platforms are well-proven as they have already been in service for many years, which means that manufacturers are able to save on development costs for the platforms since the technologies involved have already been very refined. This allows manufacturers to shift resources that would be typically used on development to making a model tailored for the Chinese market. Furthermore, the fact that these models carry the names of well-established brands like VW and Buick adds to consumer confidence.
Another key factor which determines which manufacturers most understand the Chinese market is their market strategies and planning work. Briefly put, those manufacturers with the most adaptable market strategies are most likely to succeed in the Chinese market. This in large part requires close cooperation with their Chinese partners, as there is no better source for local market knowledge than local talent. As a result, these models are made with the overwhelming majority of input from the Chinese side of JV companies, which when combined with the proven track record of the platform technologies supplied by the JV’s foreign side leads to cost-effective, well-received products.
In conclusion, having models designed specifically for the Chinese market is a huge boon to any manufacturer active in the country. It is also one of the reasons why names like VW and GM are so ubiquitous in China, while other otherwise accomplished companies have failed to make significant inroads in the country.