Foreign auto brands are gunning for the top position in China’s hyper-competitive auto market.
General Motors maintained its first-half annual sales lead in China for nine straight years in a row, beating German rival Volkswagen. GM’s sales in the first six months of the year rose to 1.57m deliveries, compared to 1.54m at VW.
However, the two global brands remain locked in a race with Japan's Toyota Motor Corp to dominate the Chinese market and become the world’s largest automaker.
Both GM and VW are planning heavy investments in China to achieve this goal: GM will spend a further $11bn in China on plants and products by 2016, while VW has earmarked $12.8bn through 2015.
German carmaker BMW also reported faster sales in June than rivals Audi and Mercedes. Sales from BMW’s core brand were up 9.4% in June to 153,000 units, compared with 8.3% and 5.5% growth at Mercedes and Audi, respectively.
The luxury carmaker attributed the significant rise in sales to strong demand from China and the US and it believes it may be able to maintain this momentum. Frank Schwope, an analyst at NordLB, believes BMW is “ahead on fuel-saving technologies” and has significantly improved the design of their cars, both of which give them a competitive advantage over rival German marques.
BMW expects China will surpass the US as its top national market by year-end, as strong growth from smaller cities continues to drive sales. According to Karsten Engel, head of BMWs business in China, there are “100 cities with more than a million inhabitants with no premium car dealers at all, so this shows huge potential.” However, this may be curbed by recent news of potential sales caps to fight rising CO2 emissions.
Despite this possible legislations, research analyst, Nielsen, has estimated that 68% of China’s potential car buyers in the next 12 months will come from residents of small cities. BMW’s first-half sales increased 16% to a record 170,730 vehicles, leaving management optimistic despite signs of an industry slowdown and overcapacity.