Domestic auto startups have long shot at Toyota

Beijing—There’s no tax on big talk, goes a Chinese saying. Many indigenous car brands seem to have taken that aphorism to heart.
BYD Auto, a small privately owned carmaker that recently graduated from making batteries, has grandly announced that it aims to be a global auto champion by 2025 by moving more than 13 million units a year. The only problem is the Hong Kong-listed BYD sold a mere 60,000 cars last year, less than 0.7 percent of that of Toyota, which has unseated General Motors to be the world’s top carmaker this year.
Two years ago, Geely, another privately owned Chinese carmaker, declared that it expects to sell 2 million vehicles annually by 2015, with two-thirds abroad. The company’s 2006 sales stood at 200,000 units.
Commenting on such pompous boasts, Yale Zhang, director of Greater China Vehicle Forecasts for US auto consultancy CSM Worldwide Corp, says: “They are only trying to grab publicity.”
But Zhang is quick to add that it’s just “a matter of time” before one or two local companies grow into globally competitive brands, even if not as big as Toyota. “Yet it will take them 20 to 30 years,” Zhang predicts.
Most Chinese car brands have been making rapid progress in recent years as a result of rising prosperity and the consequent increase in vehicle demand in the world’s most populous country.
According to Zhang, Chery, the top Chinese nameplate in the passenger car sector, is the most promising candidate to become a global player. The company, based in the eastern city of Wuhu, sold more than 300,000 units last year.
A partner of Chrysler and Fiat, Chery is widely seen to have the strongest research and development capability, with the biggest lineup among Chinese carmakers. It also enjoys strong backing of the central government and local authorities. Chery has been researching the success of Toyota, from product portfolio, manufacturing, quality control and cost-cutting to marketing, sales and overseas expansion. “We will become a Chinese Toyota,” it declares.
Chery aims to boost its annual sales to 1 million units by 2010, a much more realistic goal than that of BYD or Geely. It also plans to double the number of its overseas plants to 14 and lift its sales abroad to 400,000 units from 52,000 units last year. Other Chinese brands are also trying to follow the path of Toyota. A top executive from Geely says: “In the long term, we will have plants in all regions of the world where Toyota has.”

—The Daily Mail, China Daily news exchange item