Transnational auto com panies'China strategy shows three new trends

跨国车企中国战略呈现三大新趋势

Transnational automobile companies have demonstrated three new trends in their China strategy，namely scrambling for new energy vehicle market，stepping up production expansion， and rying to snatch shares in low-end car market.

China has sped up research and development(R&D)and industrialization of new energy vehicle in recent two years，planning to spread the use of hybrid vehicles in the public traffic， taxi service， public affairs and municipal work of 20 cities.The country started providing subsidy to individuals buying new energy vehicles in five sities including Beijing and Changchun as of June this year.

As early as 2006，Japanese automaker Toyota had introduced hybrid car Prius to China for production.But the sales of Prius car have bnot been satisfactory in China due to the gigh prices and low acceptance on the market，but it has exposed the Toyota's intent to control the commanding point on China's new energy vehicle market.

Lately，Volkswagen and Shanghai GM have one after another published their new energy development plans to cover their electric car Golf，electric car new Sail.Indusry insiders predicted that China would face a new round of fierce competition from among transnational companies for electric vehicle market around 2013.

Several Sino-foreign auto joint venture companies including FAW Volkswagen， Dongfeng Nissan and Guangqi Honda have been stepping up production expansion this year.FAW Volkswagen plans to build a new plant in Nanhai， southern China's Guangdong Province at a cost of euro500 million， which is designed to start production in 2013，with its production capacity expanding from the 150，000 units to 300，000 units.Guangqi Honda Automobile announced to invest RMB930 million in production expansion by 120，000 units.At the same time，other Sino-foreign companies founded with such companies as BMW， Nissan，Hyunbdai，Ford and Fiat have also released their production expansion plans respectively.According to incomplete statistics，the production cpacity of the above companies in China will exceed 2 million units by 2013，and they will add investment of about RMB50 billion.

Chinese auto experts have expressed their worries over the situation.The large-scale production expansion of the automakers may bring about risks of overcapacity.But some other people are optimistic about the automakers'expansion，holding that output increase would leas to product price cut，giving more benefits to consumers.Consumers will benefit from the Sino-forign joint ventures'move to edge into the marked of low-end cars with price less than RMB 100，000.The launching of Chevrolet New Sail car at a price of only RMB56，8000 each on the market in January this year，which is the first intermtional brand car with price of less than RMB600，000 per unit in China.Dongfeng Nissan held a press conference recently for it new car model“March”，which is expected to put on the market in the second half of this year， at a price between RMB70，000 and RMB 100，000 oer unit.

For a long time，transnational auto companies have focused their brands on high-and middle-grade cars with price more than RMB100，000.The low-end cr market has been dominated by China's homegrown brands，and Chinese and foreign brands have been in peaceful coexistence as each of them has the focus on the market.However，the situation has changed.As focus on the market.However，the situation has changed.As more and more auto purchasers are from small and midsize cities and the rural areas，transnational brands have started to turn to hgu low-end car market.China's homegrown brand vehicles are now facing more competition and bigger challenges.The fight between foreign brands and Chinese homegrown brands for more market share is getting intensified.