Guangzhou Auto focuses on own brand
June 27, 2013 Category Automotive, Automotive Metals & Minerals
Guangzhou Automobile Group is stepping up the development of its own brand as over-reliance on its Japanese partners for growth has proven dangerous, especially last year, when Japanese cars lost their attraction to Chinese consumers due to the Diaoyu islands dispute. After sales doubled for the group’s domestic brand, Trumpchi, in the first quarter, the state-owned carmaker said it would inject CNY2.85 billion over the next few years to double plant capacity. It would also introduce a new model every year, including a hybrid crossover that might hit the market later this year. The new hybrid car is the group’s first charge into the new-energy vehicle sector. Although its fuel efficiency is about 10% lower than that of Toyota’s Camry hybrid, the Trumpchi hybrid will save up to 70% of the fuel required by its petrol-driven rivals. Guangzhou Auto’s executives hope its retail price will be much more competitive than the model from Toyota, which has yet to localize production of its hybrid line. While Guangzhou Auto has already sold about 100 of the hybrid cars to government departments and kept another 100 for internal use, the firm’s engineers said the model still could not be priced competitively enough for retail sale. While the government offers subsidies of up to CNY120,000 for electric cars and CNY100,000 for plug-in hybrids, a buyer of a conventional hybrid car gets only a CNY3,000 subsidy – a fraction of the price of the Camry Hybrid, which costs CNY259,000 excluding tax. New incentives could bring the prices of hybrid cars below CNY200,000. Guangzhou Auto’s net profit plunged 73.5% last year to CNY1.13 billion, but sales rebounded 19% to 269,799 units in the first quarter of this year. Executive Director Lu Sa expects sales to rise 26% to 950,000 units this year. Although the Trumpchi brand remains a minor contributor to group revenue, sales of its models – including the popular GS5 SUV and GA5 car – more than doubled in the first quarter. The group is set to launch the GA3, a new compact car based on the Alfa Romeo 166 platform, next month. Guangzhou Auto will double the capacity of the Trumpchi plant to 200,000 units next year, although part of the new capacity would be leased to a U.S. carmaker, the South China Morning Post reports.
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