It is expected that over the next three to five years more than half of the domestic car brands in China will disappear due to the tough competition.
Dong Yang, vice chairman and secretary general of the China Association of Automobile Manufacturers said that competition in China will become really tough as more Chinese cities restrict vehicles and the foreign brands keep expanding production.
Sales figures already show a decline of domestic brands sales. From January to June China’s global passenger vehicle sales were up 7.1% to 7.6 million, but domestic sales were down 0.2% to 3.2 million. This means that overall market share of domestic brands declined 3% to 41.4% in the first half of the year.
Compared to global car manufacturers, Chinese auto companies are weaker in R&D and branding, which will mean a loss of market share if they go forward. Michael Dunne, president of Dunne & Company, an automotive consultancy based in Hong Kong, observed that many customers in China have become more discerning and knowledgeable than before.
“Five years ago almost everybody was buying their first car,” he said. “Now they’re coming around for the second time, and that’s separating the stronger brands from the weaker.”