Domestic manufacturers are skimping on everything to build the car which is just 'good-enough'.
In a market dominated by foreign brands and over-saturated with domestics ones, Chinese firms are trying harder and harder to increase profitablity – and succeeding.
Zhejiang Geely Holding Group, one of the nation's largest carmakers, managed to save 200 million yuan ($32 million) and two years in development time on its popular Panda model, which is loosely based on the Toyota Aygo. Typically, global manufacturers spend between four to five years and conduct between 125 and 150 crash tests for each new vehicle, whereas Geely managed to achieve the same results with just 25 tests in two and a half years.
As well as dramatically reducing the number of safety tests, Geely has also simplified designs, used cheaper materials, outsourced design and engineering work and generally skimped on frills to cut costs. As a result of all this, some of its smaller, inexpensive cars retail for just 40,000 yuan ($6,400) – less than half the price of an entry-level Toyota. However, this no-frills approach may yet prove to have its flaws as China's regulators announce tighter recall regulations for vehicle faults.
In the early 2000s, there were more than 100 registered automakers in China – a number which is now shrinking fast. These companies dealt with their lack of experience by producing unsophisticated cars which looked like their Western counterparts, but lacked drive-ability and 'soul'. More than a decade on, domestic companies have pooled their resources and learned from their foreign joint venture partners, creating a wealth of domestic expertise.
Cutting back on frills, whilst using vital technology, has helped domestic car manufacturers create cars specifically for China's growing middle class, who demand both reliability and affordability. Companies like CH-Auto are targetting consumers earning 50,000 to 60,000 yuan per annum ($8,000 to $9,600). With auto-financing, these vehicles become and easy-to-purchase item for this group.
These cars are not only popular with Chinese consumers, but are also gaining market share in developing economies such as Egypt, Indonesia and Ukraine. The Chinese automakers' association forecast exports of Chinese vehicles will reach one million units this year, up 15% from last year.
In 2011, the Geely Emgrand EC7, retailing between 66,500 to 111,000 yuan ($10,600 to $17,800 won five out of six stars in Europe's NCAP safety tests. It could be a while before its fellow Chinese automakers enter the European market, however, attractively low price tags will no doubt ensure their popularity elsewhere.