Executive Briefings

Automakers Reengineer Their Brands Just for Vast Market in Interior China

The Chinese market is the holy grail for GM, Honda and Nissan Motor, which are creating brands targeted specially for the world's biggest car market. Their goal is to boost sales in China's interior, where incomes rose almost 11 percent last year. These cheaper brands will help them compete on price against local manufacturers without diluting the cachet their core brands enjoy in more affluent regions of China, says John Zeng, an industry analyst at J.D. Power & Associates in Shanghai. "It's a win-win situation," he says. "Consumers pay a lower price for foreign-brand technology, and the foreign makers benefit from an increase in sales volume without hurting their brand image."

These made-for-China brands will use older model platforms and have few extra features, says Leah Jiang, an analyst with Macquarie Research in Shanghai. Automatic transmissions, antilock brakes, auto-climate control, and reclining seats may be left out to keep prices as low as 50,000 yuan ($7,600), says Koji Endo, an auto analyst at Advanced Research Japan.

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The Chinese market is the holy grail for GM, Honda and Nissan Motor, which are creating brands targeted specially for the world's biggest car market. Their goal is to boost sales in China's interior, where incomes rose almost 11 percent last year. These cheaper brands will help them compete on price against local manufacturers without diluting the cachet their core brands enjoy in more affluent regions of China, says John Zeng, an industry analyst at J.D. Power & Associates in Shanghai. "It's a win-win situation," he says. "Consumers pay a lower price for foreign-brand technology, and the foreign makers benefit from an increase in sales volume without hurting their brand image."

These made-for-China brands will use older model platforms and have few extra features, says Leah Jiang, an analyst with Macquarie Research in Shanghai. Automatic transmissions, antilock brakes, auto-climate control, and reclining seats may be left out to keep prices as low as 50,000 yuan ($7,600), says Koji Endo, an auto analyst at Advanced Research Japan.

Read Full Article