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"Go inland" is the catchphrase of automakers in China in 2010
Yang Jian | 2010/1/20

SHANGHAI -- Though Zhejiang Geely Group Holding Co. is on track to acquire Volvo and Sichuan Tengzhong Heavy Machinery is soon likely to bag Hummer, the motto of most Chinese automakers this year will not be "Go global".

Instead, the slogan most closely describing their strategies should be "Go inland". This year more than ever, international and domestic brands will compete for the huge market now opening in China's interior.

Take, for starters, GM. Recently the American automaker's plans to introduce its China-developed cars to India have attracted no small attention. Over and above this, however, has been the media coverage given to the launch of its Chevrolet New Sail small car in China on January 11.

By launching the model in the southwest China city of Chengdu and pricing it between 56,800 yuan ($8,400) and 68,800 yuan ($10,100), GM has done nothing short of declaring a war against the domestic Chinese brands that have until now seen inland China as their exclusive territory.

Another entrant into the fray has been Volkswagen. Also in Chengdu, the German carmaker is ramping up capacity of its local plant, from 150,000 to 350,000 units, to build the next generation of its Sagitar and Jetta models in the city.

Even the Japanese, who have been the least willing among international players in China to compete on price and move downscale, are now pitching in.

Executives of Guangqi Toyota, one of the Japanese carmaker's two joint ventures in China, told Chinese media their company is considering building a small and price-competitive car to target the lower end of the Chinese auto market.

The joint venture also announced plans to step up the expansion of its dealership network in central and Western China. Guangqi Toyota now makes the Camry mid-sized sedan, the Yaris small car and the Highlander SUV. 75 percent of its dealerships are in coastal China.

Likewise, Guangzhou Honda Automobile Co., that now produces Honda Accord, Fit, New City and Odyssey, also plans to extend its dealership network into China's interior.

With small variations in phrasing, the expression "Go inland" can in fact be found in all the statements international automakers have made about their China strategies for the year 2010.

Why? The reason is quite simple: they need to do it to capture future growth opportunities of China's auto market.

Inland China has emerged as the main growth engine of the market here. According to the latest available statistics from China Association of Automobile Manufacturers, auto sales in second-tier and third-tier Chinese cities in the first nine months of 2009 surged 41 percent and 51 percent, respectively. By contrast, sales in the tier-one cities such as Beijing and Shanghai only increased 34 percent.

Some domestic brands have started reacting to the aggressive moves global players are making into their backyard. Geely, for one, has disclosed a plan to beef up capacity to 120,000 units from 50,000 units now.

The first shots have been fired. Standby to see how other Chinese automakers respond.

Pictured:Yangjian is the Managing Editor of Automotive News China.

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