SHANGHAI -- In China, international automakers have targeted the middle and upper end of the market and showed little interest in small, inexpensive cars.
But now, global players are beating a path to what used to be largely the territory of Chinese brands. It is time for the domestics to respond quickly.
Until recently, except for aging models such as the Volkswagen Santana and Jetta, few foreign models in China sold for 100,000 yuan ($14,285) or less.
But intense competition among global automakers operating in China is now forcing them to move downscale for market share.
About two years ago, international automakers started launching cars in China priced between 70,000 yuan ($10,000) and 100,000 yuan ($14,285).
Now the pace is quickening. In the first quarter of this year, a series of such models have been launched here, such as the new Toyota Vios, Mazda2 and the new Chevrolet Aveo. Later this year, Ford Motor Co. is expected to produce the Verve small car, and Toyota Motor Co. will start selling the Yaris.
With high brand recognition and effective marketing, low-price models from international brands are being well received by Chinese customers.
For example, April sales of the Nissan Livina surged 5,093 units from April 2007, a sixfold increase.
"With more and more international brands reaching out for the low end (of the market), domestic brands will have a hard time, and we are facing the risk of losing our only living space," Qi Yumin, president of China Brilliance Automobile Holdings Co., recently told the domestic press.
Performance of leading domestic brands has remained mixed so far this year. For the first four months, Geely Holdings Group Co. posted an impressive 19 percent year-on-year sales growth, but sales of Chery Automobile Co. only inched up 2 percent, well below the market average of 14 percent.
To meet increasing competition from international giants, the domestics must grow faster.
From what they displayed at the Beijing auto show in April, domestic brands have adopted better styling. But product quality must improve.
These days, I still often hear people talking about their unpleasant experiences test driving domestic brand cars. Doors are difficult to open. And sometimes, the cars won't start. To win consumers' hearts, the domestics need to prove they can offer good prices and good quality too.
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