It’s an oft-stated fact that China has become the great hope of carmakers. While the country is good at producing cheap cars for price-sensitive consumers, capturing the upper end of the spectrum is more difficult. China still imports a lot of high-end and midrange cars from Japan and Germany, which together dominate the import market – in particular when it comes to the dark sedans that port business and political leaders from conference to luncheon.
Seeking to acquire the necessary technology and expand market share, some brands have begun to invest abroad, to much fanfare. Geely is one of the more prolific. After investing in Australia’s Drive Train Systems, the firm is buying Volvo and simultaneously launching its own brands aimed at higher price points. Beijing Automotive Industry Holding Co (BAIC) is trying to purchase parts of Saab, and Sichuan Tengzhong appears to be closing a deal to buy Hummer. However, analysts question whether these acquisitions will do much help domestic firms capture share from foreign brands.
Regardless, Chinese drivers and their passengers may come to rue the day they abandoned the subways for the roads. Traffic and traffic accidents are rapidly rising, and it is unclear where all these new cars will ultimately be parked.
