The recent walk through the Geneva Motorshow, the pinnacle spring meeting of the auto industry in Europe, was quite revealing about the Chinese car market.
After a few hours “inspecting” the latest propositions of the world’s vehicle manufacturers I was more convinced than ever that China has indeed become a modern auto market, at least with regards to the products on offer. On the various stands you have seen cars which are already strongly present on China’s streets, with most of them even being manufactured in the mainland. It is certainly no longer old and outdated models that dominate street scenes in Beijing, Shanghai or Guangzhou!
Geneva was also revealing about the state of Chinese car manufacturers: They are not yet running with the big dogs of the global industry. Only two Chinese domestic brands, BYD and Brilliance, showed their vehicles in a decent way. The absence of the number one Chinese car brand in terms of 2007 vehicle sales, Chery, made it clear that the time has not yet really come to target mature car markets (although Brilliance has announced to re-launch car sales in Europe this summer). Indeed, the challenge is on the home market, which is primarily where Chinese domestic car makers have to seek sustainable success, with products and brands that meet the needs of quickly maturing and ever more demanding consumers.
This year in Geneva, an oversize model of the revived Cinquecento made the Fiat stall very special. As much as it motivated visitors to take a closer look at the new Fiat 500, as well as the other new Fiat models, it reminded me that with the beginning of this year (Nanjing) Fiat has practically ceded to sell cars in China. What a pity! Fiat was one of the first players in the market, and should have had a competitive advantage vis-à-vis the newcomers due to longstanding experience. Yet, like other “early birds” such as Volkswagen and Citroen, Fiat seems to have struggled with the rapid transformation of the Chinese market. While Volkswagen has accomplished a phenomenal turn-around, and Citroen is about to regain speed, the brand from Italy has, however, not succeeded in seducing consumers and failed to bring new attractive models into the Chinese market.
After the merger of Shanghai- and Nanjing Automobile Groups, it appears to be a wise decision for Fiat Auto to leave Nanjing and head for Wuhu, the home of the Chery Automobile Corporation. The plan to form a new Joint Venture could result in offering Fiat- but also Alfa Romeo branded cars as early as in 2009.
However, the time lost to build a good reputation among Chinese consumers may weigh heavily on the future task of marketing strategists, and the pressure to succeed will be high. There is no room for a second failure! But how much will the quasi-departure in 2008 impact Fiat’s new brand building in China? And how long will it take until we see big stands full of confidence at the Beijing and Shanghai auto shows, which motivate visitors to take a closer look at the new Fiat models in China?
For any further information or enquiry, please contact Klaus at Klaus.Paur@tns-global.com
