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Chinese firms buy into Europe
by Staff Writers
Paris (AFP) Feb 19, 2012


Chinese automakers have returned in force to Europe, buying up brands and plants after early efforts to get a foothold in one of the world's largest car markets failed.

Great Wall Motor is the latest China entrant, with production at its plant in Bulgaria due to start Tuesday, giving it access to the European market of some 500 million people with a very competitive line up which may give Europe's established firms pause for thought.

Prices for its base Voleex C10 model, the Steed 5 pick-up and Hoover H5 four-by-four run from just 8,000 euros to 14,700 euros ($10,600 to $19,400) and the company, which has 10 sites in China, says is aiming for production of 500,000 vehicles overseas by 2015.

Analysts said it may be surprising that Chinese firms seem so determined to get into Europe, a saturated market where car sales are declining, but there are benefits for them, especially in terms of branding and prestige.

"It is a way for them to make progress in quality levels," said Yann Lacroix, analyst at Euler Hermes in Paris.

In Britain, Geely Motors plans to start selling a mid-range sedan by the end of the year at a very competitive 10,000 pounds ($15,460, 12,000 euros).

Announcing the move in December, the company, which owns Sweden's Volvo Cars, said "the leaps and bounds made in manufacturing mean that China's car makers are rapidly closely the gap with Europe's establishment.

"We will be aiming to widen our range just as quickly as possible, probably at least a new model range every year for the next four to five years."

Reflecting the growing global ambitions of Chinese automakers, Geely bought Volvo from US auto giant Ford for $1.5 billion in 2010, less than a quarter of what Ford paid for the company in 1999.

"In that way, the company made a very significant technological jump," Lacroix noted.

Meanwhile, China's largest home-grown carmaker Chery Automobile has established its base in Italy with local company DR Motor and at the end of last year bought a Fiat plant at Termini Imerese in Sicily.

Chery is developing its own marque for Europe, Qoros, in cooperation with an Israeli company which should make its first model next year.

Chinese auto companies have also shown an interest in acquiring those European firms which have run into hard times as their home market falters.

Beijing Automotive Industry Holding Co. expressed an interest in acquiring General Motors' European operations grouped in the Opel business as the US motor giant collapsed into bankruptcy from which it has only just emerged.

In the event, GM -- which has large Chinese operations of its own -- turned down the sale on concerns about technology transfer and decided to keep Opel.

Similarly, it refused to sell its Saab auto business to two Chinese firms -- Youngman, a constructor, and distributor Pang Da -- with the unit eventually being taken on by a Dutch group before it failed and was forced to file for bankruptcy in December.

Swedish press reports have said Youngman may still be interested in buying the company and ready to make a multi-million-dollar bid.

Youngman showed keen interest in snapping up Saab before it declared bankruptcy but its efforts were thwarted by the GM which balked at transferring the necessary technology licences.

Analysts said that Chinese manufacturers got off to a bad start in Europe in their first efforts as critics highlighted safety concerns and lack of individual styling.

Since then, China has emerged as the world's largest auto market, covetted by the major US and European brands as a major source of growth and profits, and standards have improved dramatically.

"We are seeing spectacular progress," said a spokesman for Euro NCAP, the safety standards authoritiy which tests all autos for safety in Europe.

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Chinese automaker sets European foothold in Bulgaria
Sofia (AFP) Feb 19, 2012 - With a brand new Bulgarian plant set to start churning out cars by end-February, China's Great Wall Motor hopes to establish a foothold to expand sales across Europe, says its local partner Litex Motors.

"This is the first plant for a Chinese automaker that will produce in Europe and for Europe," Litex Motors marketing director Ivo Dekov said in an interview with AFP ahead of the plant's opening on February 21.

The industrial assembly facility in the northern village of Bahovitsa will initially employ 150 workers, capable of making 4,000 automobiles per year from China-imported kits.

"But production will increase as the markets here and in other European countries develop," Dekov said.

"Depending on demand, we can produce an annual 50,000 vehicles with 2,000 workers on two shifts, or even 71-72,000 on three shifts," he said confidently.

Bulgaria's qualified and competitive workforce as well as its low taxes made the poor EU newcomer an ideal starting base to enter the common EU market for Great Wall Motor, one of the biggest sports utility vehicle makers in China, Dekov said.

"Our partners consider Europe a strategic market and count on entering it gradually but permanently, with good products and a successful strategy."

"But it is only natural that our primary goal is to also become a leader in the domestic market," he added.

Litex signed a deal for a joint venture with Great Wall Motor in 2009 that would allow the Chinese group to export tax-free to the common EU market.

Now the Bulgarian group aims to achieve the same market share -- about 30 percent -- as other automakers with locally produced cars in neighbouring Romania, Serbia and Turkey, according to Dekov.

"Of course, we will need time to do that as we are only learning to walk right now," he said.

The plant, which has been test producing since mid-November, is ready to start sales immediately of two locally-assembled Great Wall models -- the Voleex C10 city car and the Steed 5 pick-up, with prices ranging between 16,000 and 25,000 leva (8,200-12,800 euros, $10,700-16,700).

Over 200 imported vehicles were already sold in Bulgaria between mid-October and end-2011, Dekov said.

"I consider this a great success! On the whole, interest in the brand, the plant and the vehicles has been huge and customers' reactions have been thoroughly positive."

The cars' affordability, a five-year guarantee and other car equipment included in the starting price will help Litex compete well in a market where the ratio of new-to-used car sales is just 1:10 compared to Europe's 1:3, the group believes.

The 24-hour delivery of spare parts through 17 dealerships and after-sales service points in Bulgaria -- set to grow to 20 this year -- was another competitive advantage, he added.

"This year we will also add three more models to the plant's production range, including the Hover H6 SUV," Dekov said.

"Great Wall Motor's overall plans for Europe are to offer a total 8-10 models by 2016," he added.

Great Wall, which sells cars in 120 countries, is the only Chinese automaker to have obtained Whole Vehicle Type Approval to market several of its models in the EU. China-made Great Wall Motor cars have already been selling in Italy since 2006.

"Plans are to start sales in Bulgaria and cover the other European and Balkan countries with what we supply," Dekov said.

In the long run however, Litex hopes to start making some parts here rather than only assembling China-imported kits, and talks have already started with possible subcontractors, he added.

Litex Motors, which made the bulk of the investment in the new Bulgarian plant, will also start building welding and painting units to add to the simple assembly lines over the next few years.



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CAR TECH
Renault optimistic for 2012 on strong sales
Paris (AFP) Feb 16, 2012
French auto giant Renault said Thursday it was optimistic for this year after 2011 results showed it weathering tough times better than rival PSA Peugeot Citroen, despite a drop in net profit. Renault said it had sold a record 2.72 million vehicles last year, with particular growth in its low-cost entry-level cars, marketed under the Dacia brand in Europe. Net profit for 2011 came to 2.0 ... read more


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