Geoff Dyer, Beijing
November 20, 2006
SHANGHAI Automotive had postponed plans to export Rover-based cars to Europe and the US in order to concentrate on the Chinese market, a senior executive said at the weekend.
Phil Murtaugh, the former head of General Motors in China who now runs Shanghai Auto's international operations, said the company would only begin to export the cars once they had become successful in the local market. His comments are the latest indication that the much-hyped invasion of the US and European car markets by Chinese brands will be much slower than had been expected. Chery and Geely, two other ambitious Chinese car makers, have also recently delayed their planned entry to the US market. Shanghai Auto executives said earlier in the year that they hoped to begin selling the Rover-based cars in Britain and some other European countries from 2007.
"We have to get it right at home before we go outside of China," said Mr Murtaugh in the first interview he has given since moving to Shanghai Auto in September. "I do not know when we will start exporting."
Shanghai Auto bought the rights to the designs of two Rover models shortly before the British car maker collapsed last year. Another Chinese company, Nanjing Auto, later acquired the rights to several MG models. The Rover name is owned by Ford and Shanghai Auto is launching its cars in the Chinese market under the new brand name Roewe, although analysts believe it will try to acquire the rights to the Rover name from Ford when it launches its vehicles overseas.
State-owned Shanghai Auto is considered one of the Chinese companies with the best chances of successfully building its own car brand because of its manufacturing pedigree - its joint ventures with General Motors and Volkswagen are the biggest car makers in the fast-growing Chinese market.
Mr Murtaugh said the company would be able to build quality cars but the biggest challenge it faced was establishing a good customer service system, of which few Chinese companies had any experience.
Although a number of multinational companies are considering exporting cars from their plants in China, Mr Murtaugh said there was little chance that the car-making industry would shift to China, as many other manufacturing sectors have, because wages were rising quickly.
"There are not going to be too many more years when you will see low-cost and China in the same sentence," he said. "It is really expensive to put cars on a boat and ship them around the world. Why do you think the Japanese and Koreans have invested so much in new plants in the US?"
A number of senior industry executives are in Beijing this weekend for the country's annual motor show, a sign of the increasing importance of the Chinese market to the auto sector.
DaimlerChrysler chief executive Dieter Zetsche said the company was still discussing a manufacturing deal with a number of potential partners to make small vehicles for the group. One of the companies involved in the talks is believed to be Chery, the Chinese company.