Foreign Spending Spree Augers Woes for China Car Makers 外国车企大举投资中国本土车企倍感压力

By newsdoug on September 26, 2011

Foreign spending to eat away at share of domestic car makers Despite facing a sharp slowdown in the domestic auto market, foreign car makers are showing no signs of slowing down their investment in China — a trend that looks worrisome for big domestic names that are no doubt being forced to curb spending. In the latest development on that front, Chinese media are reporting that Germany’s Volkswagen (Frankfurt: VOWG), China’s largest auto brand with 13 percent of the market, has decided to boost its already sizable investment plan for China, now aiming to spend $19 billion from 2012 to 2016 from a previous target of $14.3 billion from 2011 to 2015. (English article) That expanded mega-investment plan comes as Ford (NYSE: F) and General Motors (NYSE: GM) have also earmarked major new dollars to boost their China investments, including recent symbolic commitments by both companies to boost their electric car development in the country. (previous post; Ford article) These kind of sharp spending increases during a downcycle reflect not only the longer-term vision that the foreign auto giants hold out for China, but also simply the fact that they have much better financial resources than their Chinese counterparts and realize that competition will only become more fierce as the market slows. By comparison, Chinese car makers are more likely to rein in their spending during the downturn, causing them to fall further and further behind their foreign rivals that already enjoy an edge in terms of consumer perceptions and product quality. All this bodes poorly for domestic firms like BYD (HKEx: 1211; Shenzhen: 002594), Chery, Geely (HKEx: 165) and BAIC, which have already seen their sales drop sharply and could see their position erode further amid aggressive foreign spending. I wouldn’t expect to see any of these car makers fail, as all enjoy strong support from local governments; but that said, look for their market share to fall sharply in the next 2 years until many become insignificant players in their own home market.

Bottom line: Aggressive spending by foreign car makers like VW and GM in China will cause domestic players to lose considerable market share during the current downturn.

尽管国内汽车市场大幅放缓，但外国汽车厂商却未显露出放缓对华投资的迹象，这一趋势似乎让很多不得不削减开支的国内大车企忧心不已。中国媒体近日报导称，德国大众汽车<VOWG_p.DE>决定加大对华投资，计划在2012-2016期间向中国投资190亿美元。该公司原计划在2011-2015年期间向中国投资143亿美元。大众汽车在中国拥有13%的市场份额。福特汽车<FN>和通用汽车<GM.N>也计划增加对华投资，近期两公司承诺将在华推进电动车开发。这种在市场低迷期间大幅增加投资的举动不仅反映出外国汽车巨头对中国市场持有的一种长远眼光，也反映出他们拥有优於中国车企的金融资源，且意识到当市场放缓时，竞争只会变得愈发激烈。与之形成鲜明对比的是，中国汽车厂商在经济低迷期间更可能会控制开支，造成他们更加落後于外国竞争对手。外国汽车厂商在消费者认可度和产品质量方面优於国内汽车厂商。所有这些对比亚迪<1211.HK><002594.SZ>、奇瑞汽车、吉利汽车<0175.HK>、北汽控股(BAIC)等国内企业都不是好消息。上述国内汽车厂商的销量已大幅下滑，面对外国车企的大举投资，其市场份额可能进一步受损。我不认为当中的任何一家企业会破产，因为这些企业都受到地方政府的大力支持，但我要说，他们的市场份额料将会在未来两年内大幅下滑，最终很多车企在国内市场中将无足轻重。

一句话：大众和通用汽车等外国汽车厂商大举投资中国将使国内汽车厂商的市场份额在目前低迷的环境中大幅下滑。

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