Chinese automakers claim stake in new technology as light car demand drops

In July of 2009, Caijing Magazine quotes unidentified sources as saying Chinese automaker Chery is looking for bank and equity investor help for a possible bid for Volvo, Ford’s Swedish nameplate. Chery looses out to Geely. Image Credit: The Auto Beat

Chinese automakers claim stake in new technology as light car demand drops

China's automakers Geely and BAIC pushed ahead with plans to harness the technology of Ford's and General Motors' ailing Swedish brands Volvo and Saab in a bid to be global industry players. A significant technology gap between domestic Chinese automakers and their global rivals, has left the Chinese looking for acquisitions of overseas technology and designs as the global auto industry restructures.

Ford Motor Co. released a statement today, Wednesday December 23, 2009, that it aims to complete the sale of its profit loosing Volvo Cars unit to a privately-held Chinese auto maker, China's Zhejiang Geely Holding Group, parent of Geely Auto, in the second quarter of 2010.

Beijing Automotive Industry Holding Corp (BAIC), China's fifth-largest automaker, said separately it would launch an aggressive campaign to develop its brand both at home and overseas, after buying the rights to three old Saab models from GM. BAIC is expected to invest 33 billion yuan ($4.8 billion) in vehicle R&D over the next three years, after paying $200 million for the Saab technology, including the rights to three overall vehicle platforms and two engine technologies.

Reported that the new car Geely SL-1 is based on the Geely Vision, possibly named “Sea Wave“, inherited Huapu’s “Sea Series” name.

It should be said that from Geely Pride, we could see so much shadows of Mercedes-Benz in Geely, especially the front grille. Huapu could never get rid of such problems, this time, the Geely SL-1 looks very very like the Mercedes-Benz C class version, the front-end shapes, insurance skirts…

Front-end gives a same feeling to us

Similiar headlights? Caption & Image Credit: chinacarfans.com

All of this activity is happening at a time where the market for light car platforms in the United States has been tanking and only slow growth gains are expected over the next five years, according to a study just released by AutoPacific, a future-oriented automotive marketing research and product-consulting firm.

In a study released earlier this week, AutoPacific states that "2009 will be a memorable year for the automotive industry – unfortunately for all the wrong reasons. The U.S. light vehicle market is expected to close out 2009 at a disastrous 10.3 million sales, down from 16.1 million sales just two years prior and the lowest industry volume since AutoPacific began forecasting automotive sales in 1988. Naturally, the national economic collapse had a profound impact on retail sales of light vehicles."

The industry can look forward to year-on-year recovery over AutoPacific’s five year forecast period, but at a relatively gradual pace. In the near term, AutoPacific forecasts industry volume of 11.4 million units in 2010 as the economy slowly heals but also as unemployment hampers faster industry sales recovery. 2015 will see industry sales of 15.4 million, a significant improvement from 2009 volumes but still a far cry from the near-17 million unit years seen through much of the past decade.

“Even with the gradual recovery of the economy, many Americans will need to address serious near-term issues such as loss of personal savings and wealth as well as focusing resources on projects, such as home repairs, that had to be deferred due to the recession,” said Ed Kim, Director of Industry Analysis at AutoPacific. “Because today’s vehicles are more durable and long lasting than ever, consumers are able to put off new vehicle purchase for much longer than they have been able to in the past. This dynamic will hamper industry recovery in the near term.”

2009 Pontiac G8 GT - With its aggressive styling, sport suspension and available V8 power, the full-size rear-wheel drive G8 sports sedan is proof that Pontiac is serious about performance cars. Image Credit: Pontiac/General Motors

To further complicate the issue for Chinese automakers, that even though the industry has seen the loss of several autobrands and nameplates (Saturn, Pontiac, PT Cruiser, the Chrysler Aspen and the Dodge Durango are a few examples that come to mind) the industry still expects nearly 300 individual vehicle nameplates in the marketplace by 2015. By comparison, there were only 198 nameplates back in 1998, which was the last time industry volumes were at around 2015’s expected level (15.4 million units). Thus, automakers will be fighting for a piece of a much smaller pie. Profitability at these lower volumes will represent a challenge, especially when the drive towards greater fuel efficiency will add significant cost to upcoming new vehicle offerings.

These are not heady times to be an auto-manufacturer in this world.
(ht: WSJ, Reuters, Forbes, and AutoPacific)

... notes from The EDJE