Global Car Brands Penetrate Rural China

High Quality, Low Price Are Draws for Drivers

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Yang Jian
Yang Jian
SHANGHAI -- Domestic Chinese brands have long dominated markets in China's small cities and rural areas, thanks to their low prices.

But I found out recently, to my surprise, that global brands such as Chevrolet and Hyundai are starting to penetrate these markets.

Each year during the Chinese New Year, I leave Shanghai to see my parents in Zhengjiang, a small city in east China's Jiangsu province. I also visit my birthplace in Danyang, a rural county near Zhejiang, to see my other relatives.

As an automotive journalist, I keep an eye on the cars that people drive in these two places. In past years, I always saw a mixture of global and domestic car models in Zhengjiang.

This year, I was surprised to see the number of local brands had decreased significantly.

In the neighborhood where my parents live, I saw only 10 domestic cars. Most of them were Roewe 550 and Geely Kingkong compact sedans, parked among a hundred international models.

It was the same situation in other neighborhoods, where I occasionally saw compact cars like the BYD F3, Roewe 550 or Chery A3 pass by.

Based on what I saw, the most popular models in Zhengjiang these days seem to be the Ford Focus, VW Lavida and Chevrolet Cruze.

People like foreign models for two reasons. First of all, they are considered to be of high quality since they are international brands. Second, the average family in Zhengjiang can afford them, since they typically sell for less than 120,000 yuan ($18,000).

To my surprise, I didn't find many domestic cars in Danyang, either. Two years ago, I went to see my aunt in Danyang's countryside. The only vehicles I saw were minivans that villagers used to transport farm produce and family members. But during this holiday, I saw cars parked in front of virtually every house in the village.

Guess what brands I saw? Most of them were the VW Santana, Hyundai Elantra and Chevrolet New Sail. These cars typically sell for less than 100,000 yuan, and the Chevrolet New Sail has a starting price of just 60,000 yuan.

Why didn't I see any domestic models? "As long as the price gaps are not too big, people here would prefer international models such as the New Sail," my cousin said.

To be sure, Zhengjiang and Danyang are located in southern Jiangsu, a coastal region with a more advanced economy than inland China. But the interior now is benefiting from China's rapid economic growth. Last year, rural China's per-capita income grew 10.9%, compared with 7.8% in urban areas. The international automakers realize this, and companies like Ford and Honda are launching low-price models for those markets. With their incomes rising, even consumers in inland China are likely to abandon cheap domestic brands as international models grow more affordable.

Yang Jian is managing editor of Automotive News China.
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