Home turf war (3)

Entry-level race

GM expects that the Chinese market will grow by 5 to 8 percent this year, and said it is adding 400 dealerships in the country in 2013, autonewschina.com reported, citing Bob Socia, president of GM China.

To keep up with the market growth expectations, foreign companies are introducing more locally produced four-wheelers in order to cut costs and sharpen their competitive edge against their Chinese peers.

Socia said most of the company's new dealerships will be opened in third- and fourth-tier cities, and GM will expand there with locally produced Wu-ling, Baojun and Chevrolet models.

Ford introduced the redesigned Focus in China in 2012, and has repositioned the old Focus as a "value" model to attract more entry-level customers, according to Schoch.

"Foreign automakers are introducing entry-level vehicles to gain a share in China's interior cities and rural districts - markets that have long been Chinese brands' home turf," said Yang of Automotive News China.

Furthermore, a lack of self-developed clean powertrain technology is likely to add another blow to Chinese carmakers.

Beijing led the country by upgrading to a vehicular exhaust control standard equivalent to Euro 5 on February 1, aimed at combating hazardous smog, which has become vicious in many big cities this winter.

Among the over 200 models that passed the new standard tests by the Beijing Municipal Environmental Protection Bureau, only 27 percent are domestic-brand vehicles, China Quality News reported Tuesday.

In view of their more than 40 percent market share currently, some domestic models will have to bow out of the market for not making the cut, and this will offer new opportunities for foreign and joint-venture brands, the newspaper said.

"To prop up sales, Chinese automakers successfully expanded into overseas markets, a trend that has accelerated over the past two years. In 2012, China's light-vehicle exports surged 30 percent to 500,000 units," Yang said.

"This year, exports will continue to grow... But exports will merely cushion - not solve - the loss of market share at home," he added.