Competition in the Chinese Automobile Industry Essay Example

auto plant in Guangzhou Peugeot JV.

The partner selection process followed a familiar pattern: Beijing was pitting several bidders against each other to extract a maximum of capital, technology, and manufacturing capabilities, as well as the motor vehicle types deemed appropriate for China. Honda pledged to invest $887 million and committed the American version of the Honda Accord, whose production started in 1999. Two years letter, Guangzhou Honda added the popular Odyssey minivan to its product mix, so in less than two years Honda had turned around the loss-making Peugeot facility into one of China's most profitable passenger car JV.

On the other hand, Honda had captured a significant market share with exports of popular Honda Accord and a most effective network of dealerships and services and repair facilities all over China. Excellent reputation and brand recognition, also strengthened Honda's bargaining power with Chinese negotiators. While GM is likely to surpass two million Chinese-market vehicle sales in 2010, Ford is struggling to reach half a million. Ford was napping and arrived late in about 2003, six years behind GM.

China’s growth was not on the radar in the mid-1990s remembers a former Ford executive. They didn’t commit any terrible mistakes, but they were simply late. GM, Honda, and Toyota were already there, and the air was getting thin. The most promising potential cooperation partners, a requirement of operating in the Chinese market, already had their dance cards filled. Ford was left with a company called Changan, which is inconveniently located in Chongqing, far away from the international business centers.