Chinese automakers are looking at the European market and are taking a foothold in creating a high-end brand that aims to attract global buyers. In addition, they emphasize the advancement of technology, collaboration with large global suppliers, and excellent design and management teams. These teams are almost always executives from the European automotive industry.

The position of the independent brand to enter Europe is unobstructed at this year's Frankfurt Motor Show. Domestic heavyweight companies, including Great Wall Motor (601633) and Chery Automobile, have indicated plans to sell high-end SUVs and crossovers in Europe in the next few years.

Great Wall's new high-end brand WEY showcased the version of its VV5 and VV7C crossovers in the Chinese market, as well as the XEV pure electric concept car.

Chery introduced the TX compact crossover. This is the first model of the new high-end series of EXEED for the world.

The German brand Baowo, which invested in the revival in China, showed the BX7 crossover. This car has already been sold in China this year and will enter the market in the continent. Baowo also officially released the new concept sports car Isabella.

Electric Vehicle Start-up is a high-end electric vehicle brand based in China and the world. It has a total of nearly 200 employees worldwide. Its global operations headquarters, manufacturing base and R&D center are all located in Nanjing and established in Munich, Germany. The Product Concept and Design Center has a research and development center responsible for user interface and automated driving system development in Silicon Valley, USA. Its first product positioning is to launch mid- to high-end pure electric SUVs in the fourth quarter of 2019.

Other high-end Chinese brands planning to enter Europe include Geely's Lectra. The Leading 01 mass production crossover will enter the European and American markets in 2019. The British brand MG, a subsidiary of SAIC (600104), will also expand in the European market outside the UK in 2019.

"We have changed, it is different."

Namrita Chow, principal analyst at IHS Automotive, based in London, said that Chinese brands have entered the European market and sent a message: "We are different now, we have changed, we have developed."

Chinese automakers such as Great Wall, Chery and MG have limited market share in Europe and Russia, mainly selling small cars and pickups. However, this time, their goal is to target the fast-growing SUV market in Europe. According to forecasts, in 2020, SUVs will account for one-third of the European market, which is higher than the current quarter.

Industry analysts believe that with the rapid development of the domestic market, Great Wall and Chery have doubled their confidence, and they also believe that they have the ability to compete with European brands in China and other markets.

“10 years ago, Chinese automakers were in a very new state. They were just learning how to make cars,” said Namrita Chow.

However, since then, they have improved their products and steadily gained a certain market share from foreign joint venture brands.
In the past 10 years, Chinese brands have also improved their quality by working with first-tier suppliers such as Bosch, Dana and Valeo. In the Frankfurt show, the names of these suppliers occupy an important position.

In addition, Zhang Yu, managing director of consulting services company Automotive Foresight, believes that Chinese automakers have developed an efficient 1.5-2.0-liter turbocharged gasoline engine and hybrid powertrain, which is expected to achieve China's strict VI emissions by 2020. standard. This way domestic cars will not need to be modified again in Europe.

Chinese automakers have also established European engineering and styling studios and hired top designers. For example, Bentot's chief designer Benoit Jacob not only participated in the design of the BMW i-series electric car, but also was one of Renault and the Volkswagen design team. Mr. James Hope, Chery's styling director, worked as an international designer for Ford, Chrysler and GM.

Some senior executives of Chinese car companies are also from high-end German brands. For example, Jens Steingraeber, CEO of Great Wall Wey, was the product manager of the Audi Q3 crossover; Bi Bikang has worked in the BMW Group for more than 20 years and served as the Group's Vice President for more than 10 years. Dai Lei has been in charge of BMW China's sales business. He has served as General Manager of Infiniti China and General Manager of Dongfeng Infiniti Automobile Co., Ltd.; Baowo CEO Huali Ulrich Walker has served as Chairman and CEO of Daimler Northeast Asia and Greater China.

Namrita Chow said the move was to show that Chinese brands are “not inferior to any automaker in developed markets”.
Side by side or better with foreign models

Great Wall and Chery offer the same or better models as foreign brands at a lower price and have gained market share in the Chinese market. They are likely to continue to adopt such strategies in Europe.

Great Wall and Chery also learned from Hyundai and Kia, and established long-term guarantees and after-sales services in Europe and North America. This makes it easier to build a competitive product lineup.

Zhang Yu pointed out that WEY's China market positioning is a "medium and high-end" buyer, with a price range of 15 to 200,000 yuan.

“In China, the price of WEY is half or two-thirds of the price of a foreign car company, but it can provide more functions.”

Analysts believe that the Great Wall and Lectra have great opportunities to succeed in Europe.

“Lectra is targeting young professionals and combining potential innovations with electric vehicle powertrain, networking and mobile services,” said Peter Hage, founder of Districom Group, a car consultancy.

Namrita Chow believes that Lectra's strength lies in its relationship with Volvo. Based on the joint development of the CMA basic module architecture and the creation of the Lectra brand, Geely and Volvo will continue to deepen technical cooperation and fully share resources.
Entering Europe has many obstacles

Industry analysts believe that in addition to Baowo, China's other car brand models are not yet ready for release in Europe.

Chery will launch a new high-end brand Exeed in 2019 or 2020 to expand the European market, and the Great Wall has not yet given an exact timetable.

Chinese car brands will still have considerable obstacles after entering the European market. Hager believes: "Europe is a highly competitive market with different customer expectations in terms of car design, quality and performance. It is a daunting task for users to establish brand awareness and accept Chinese brands."

Another obstacle is the establishment of sales and after-sales networks. “This may be the biggest challenge besides the product or brand image. Even in the Chinese market, many weaker brands are not easy, no one wants to be their dealer because they know they will lose money.” Zhang Yu said.

With this in mind, Benteng has said that it will accept production orders like Model 3 and sell directly to consumers through retail partners. Lectra also proposed a similar sales model.

Lorenz Glaab, Chery's marketing director, said he is still making a decision on how to sell the Exeed brand.
European automakers will also pay close attention to the performance of Chinese automakers and prepare to fight back. Namrita Chow said: "The existing brands will not just sit there and watch them come in and steal their market share."

If Great Wall or Chery can stand up in the European market, their awareness of domestic brands will be greatly enhanced. Last year, the new car sales in the Chinese market reached 28 million, about twice that of Europe, and the market's growth potential is still quite large.

Europe is seen as a testing ground for technology and product viability, and is a key springboard for building international brands and distribution networks.

“We are China’s largest exporter and have been doing this for years,” says Gleb. “This is part of our long-term strategy. We want to truly globalize our brands and cater to those very sophisticated and demanding customers. demand."

Analysts say that from this perspective, the intention of Chinese car companies to enter Europe is not the market share, but the brand's endurance.

“Chinese car companies compete directly with European carmakers in the country, which is a success for them. But now they want to see if they can reach the level of European car manufacturing,” Zhang Yu said.

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