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 |  Apr 09 2014, 11:02 AM

Chinese Automotive Industry

China is the wild, wild east of the automotive industry. Home to more than 1 billion people and counting, it’s a hugely important market for car companies. There are many domestic brands over there but curiously foreign companies are making significant headway.

Ford, for instance, is on a winning streak in China. Over the past two years its market share has nearly doubled in the Middle Kingdom, bringing it up to 4.5 percent. Additionally for the first time ever they sold more than 100,000 vehicles back in March.

Surprisingly, Chinese customers seem to prefer American brands. They like the international flair and reputation for safety these vehicles provide. Domestic brands tend to lack these virtues. They suffer in long-term reliability surveys, initial-quality reports and crash tests.

Increasingly affluent Chinese customers want fancier cars, the types of vehicle domestic automakers don’t typically build. This is another reason why foreign brands are gaining popularity.

But China’s not an unlimited gravy train for off-shore companies. In order to build cars in the country foreign automakers have to enter into a 50-50 joint venture with a domestic car company. If they choose to import cars instead they have to pay hefty tariffs that raise the prices of their vehicles enormously.

There are talks about ending this protectionist policy but nothing has changed at this time. Like most issues some are in favor of change and others would rather maintain the status quo.

To keep its momentum going, Ford plans to further expand production. They’re about to open a new automatic transmission plant that will be able to build 400,000 units per year with maximum production of up to 1 million gearboxes. They’re also on track to open a third car-assembly plant later this year; a fourth is on track as well.

[Source: The New York Times]

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