Despite optimistic growth figures, foreign automakers look likely to dominate China's government sales
According to a report from industry consultancy JD Power, China’s car market is set to expand by 11% in 2014. Some 24m light vehicles will be added to the car parc, alongside 19m passenger cars. However, a separate report from Deloitte, another consultancy firm, suggests that official vehicle sales will be made up by foreign automakers.
At the “2014 CAAM China Auto Forum” Jin Jian, a vice-chairman at Deloitte, presented independent research suggesting foreign brands made up 80% of China’s governmental transportation segment in 2013.
Jin outlined a number of problems facing domestic manufacturers. Firstly, many companies have formed joint ventures with foreign automakers that manufacture under the foreign brand, thus reducing brand awareness for the upscale domestic marques.
Secondly, new vehicle sales are dominated by foreign brands, making it hard for local brands to compete. Most countries' official cars tend to be domestically produced, but in China no such mandates are in place. Finally, government budgets for official transportation are high, possibly around 150 - 200bn yuan ($24 - $32bn) each year, prompting officials to seek more expensive models.
According to Jin, a key step in resolving the problem would be to establish an independent purchasing body to asses the commercial viability of each set of procurements.