Half of China's Local Car Brands Are Likely to Fail, Industry Group Warns

Competition Will Thin Ranks of Domestic Producers Within Five Years

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More than half of China's domestic car brands will be weeded out by competition over the next three to five years, predicted Dong Yang, vice chairman and secretary general of the China Association of Automobile Manufacturers.

With more Chinese cities restricting vehicle sales and global automakers expanding production, competition in China will heat up, Mr. Dong said at a media briefing last week in Beijing.

In the first half of this year, China's passenger-vehicle sales rose 7.1% year-on-year to 7.6 million units. But sales of domestic Chinese brands dropped 0.2% to 3.2 million units. As a result, the market share of the domestic brands declined 3 percentage points to 41.4 % during the period, according to the industry association.

Compared with global brands, domestic Chinese bands are particularly weak in research and development, and in brand image, said Mr. Dong. So it is inevitable that the local brands will lose more market share going forward, he added.

Separately, Automotive News China reported that Zhejiang Geely Holding Group Co., which acquired Volvo Car Corp. in 2010, has been ranked for the first time on the Fortune Global 500 list, compiled by Fortune magazine based on company's annual revenue. With sales of $23.4 billion, Geely ranked 475th on the list for 2011, according to Fortune.

The addition of Geely gives China four local automakers in the Fortune Global 500. SAIC Motor Corp. ranked 130th with sales of $67.3 billion; Dongfeng Motor Corp. ranked 142 with sales of $62.9 billion; and China FAW Group Corp. ranked 165th with sales of $57.0 billion.

--Automotive News China--

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