Homegrown auto brands losing ground

Overall passenger car market grows 11.2% in H1

The market share of China's homegrown auto brands in the passenger car sector dropped further in the first half amid cut-throat competition, data from the China Association of Automobile Manufacturers (CAAM) showed Wednesday.

In the first half, homegrown auto brands sold a total of 3.63 million units of passenger cars, accounting for 37.68 percent of the market, which is 3.48 percentage points lower than that in the first half of 2013, CAAM data showed.

German carmakers still topped the sales list of passenger cars among the foreign brands. Together they sold 2.06 million units of passenger cars in the first half, accounting for 21.36 percent of the market.

Japanese carmakers followed in the list with 15.29 percent share and US firms with 12.68 percent, the CAAM data showed.

The market share of homegrown brands has declined for 10 consecutive months as foreign auto brands are rolling out budget models. The declining trend is very likely to continue, experts noted.

"It will take a long time before homegrown brands could significantly strengthen their competitiveness," Wu Shuocheng, editor-in-chief of industry portal auto.gasgoo.com, told the Global Times on Wednesday.

Dong Yang, secretary-general of the CAAM, said that average research and development (R&D) investment of China's homegrown brands is less than 2 percent of the annual sales. "The whole sector should boost R&D investment," Dong said at a press conference at the release of the data Wednesday.

Wu noted that the average R&D investment for foreign auto brands stands at 4 to 5 percent and in some cases the investment could be over 10 percent of the annual sales.

In the first half, China sold a total of 9.63 million units of passenger cars, up 11.2 percent year-on-year. Strong demand of SUVs is still a highlight of the auto sector. Sales of SUVs totaled 1.82 million units in the period, up 37.12 percent year-on-year, the CAAM said.

A survey by Nielsen, which was released at the conference, showed that 51 percent of the respondents who are planning to buy a car within one year will choose SUVs, showing the growth potential of the segment.

The CAAM data showed that the overall auto sales (including commercial vehicles) increased by 8.36 percent year-on-year to 11.68 million units in the first half of this year, and Dong noted that the growth rate may fall slightly in the second half.

China sold a total of 21.98 million units of cars in 2013.

Despite the slight slowdown, the CAAM said the current growth rate is still within a "normal range."

Yu Haixia, a vice president of Nielsen, said at the press conference that second-car demand in first- and second-tier cities and first-car demand in smaller cities will boost China's auto market in the future.

Dong also noted that new-energy cars will report strong growth from this year, given the government's favorable polices and growing recognition.