PERSPECTIVES ON THE EVOLUTION OF THE AUTOMOBILE ...

Automotive Industry in China
1.2 Plans for expansion of car makers
In this chapter, first of all we will focus on Chery and Geely, two of the most
successful Chinese companies. We will analyze what have made them successful and
which plans they have in the pipeline. Second, we will talk about the new energy
vehicles. China, that in 2008 produced only 2,000 units of hybrid and electric vehicles,
has as an objective to produce half million of these vehicles in 2011.
a) Chery and Geely
Chery and Geely are two of the local Chinese companies that are being very
successful. The reason might be in their ability to recognize at an early stage that the
Chinese market preferred smaller vehicles than the ones that were sold by the Joint
Ventures (Joint Ventures sold the same cars that were sold in Europe and the U.S.).
(Units)
400,000
300,000
200,000
100,000
0
Evolution of vehicle production
79,565
185,588
302,478
380,817
92,558
149,532
219,512
204,331
2004
2005
2006
2007
Figure 33. Evolution of automobile production for Chery and Geely. Source: Inter China
Analysis data (Originally from www.autoingo.gov.cn )
The decision by the Government to change the tax policy promoting the purchase of
new cars in April 2006, gave an advantage to Chery and Geely. The government
decided to lower the consumer tax rates on vehicles between 1 and 1.5 liters, going
from 5% to 3%. At the same time, vehicles with engines over 2 liters would have to
pay a tax of up to a maximum of 20%. The government also lifted the restrictions that
existed on the circulation of small displacement cars on some of the main avenues of
Beijing and other cities 24 . In the following paragraphs we will analyze in more detail
Geely and Chery.
24 Professors Nueno Case Study: Geely’s International Strategy.
Port of Barcelona Chair of Logistics 34