Motor Vehicles and Parts News
- Honda to create brand for China auto market
Date: 20-Jul-2007 Sources: (Shenzhen Daily)
HONDA Motor Co. said it will start selling cars with its Chinese partner under a new brand in 2010, becoming the first foreign carmaker to develop an original brand in China and highlighting the growing efforts by domestic auto companies to gain more access to foreign expertise, The Wall Street Journal reported Thursday.
Honda and its partner, Guangzhou Automobile Group Co., will spend 30 billion yen (US$245 million) to build a Chinese research and development center that will design the new brand, which doesn't have a name yet. The first few models will be derived from existing Honda cars and will likely be priced below US$10,000, targeting the low end of the market, Honda executives said.
Honda's move comes as the government is increasing pressure on foreign automakers to share more technology and know-how with domestic companies. Its goal: to swiftly improve the quality of cars that domestic companies make for export-level.
Already, China allows foreign companies to produce cars in the country only if they join hands with a local partner, allowing domestic companies access to the manufacturing skills of global carmakers. More recently, the Central Government has been urging the country's major State-controlled car companies, many of which had only produced foreign-brand cars before, to build their own brands.
For example, Shanghai Automotive Industry Corp., a joint venture partner of both General Motors Corp. and Volkswagen AG, has started rolling out cars under its own brand. The first, a sedan based on designs acquired from now-defunct MG Rover Group Ltd. of Britain, went on sale this year.
Now, the government wants to accelerate the pace of technology transfer, industry experts say. Earlier this year, the government circulated a draft of a policy paper laying out plans for the auto industry that include encouraging joint ventures to develop their own brand of vehicles, according to analysts who have seen the draft.
Honda is responding to the call of the government, said Xu Changming, an economist at the State Information Center, a think tank connected to the National Development and Reform Commission, which sets China's industrial policy. 'It will be easier for them to get government support for their future development in China,'he said.
Masaaki Kato, a Honda senior managing director, said that while the Chinese Government 'made clear its policy and intentions?to get Honda to share its technology, the outside pressure didn't influence the company's decision to launch the brand. Rather, the move 'will give us the potential to have different models specifically for China,'he said.
As sales growth has slowed in the more mature European and North American markets, global car manufacturers have increasingly been looking to fast-growing developing markets including China to drive growth. Passenger-car sales rose 22 percent year on year in China in the first half of 2007.
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