By Laurence Frost
BEIJING, April 27 (Reuters) – Thousands of Chinese consumers
already have the T-shirt. All Fiat-Chrysler boss Sergio
Marchionne has to do now is sell them the car.
Jeep’s ambitions for the world’s biggest auto market – where
the brand is popular as a clothing label – join efforts by
parent Fiat, as well as Renault and PSA
Peugeot Citroen, to raise their Chinese profiles and
compete with German car makers for premium sales.
At the Beijing auto show this week, Renault, Fiat and
Citroen unveiled roomy sedans and concept cars designed for
China. Jeep, part of Fiat-controlled Chrysler, flagged plans for
a return to local production after a six-year gap, plugged only
partially by imports that topped 22,000 four-by-fours last year.
“Chinese SUV sales have seen 46 percent compounded annual
growth over the last five years and we expect that to continue,”
said Michael Manley, Fiat-Chrysler chief operating officer for
Asia. The company is discussing Jeep assembly with Fiat’s
existing partner Guangzhou Automobile Co.
Jeep apparel, sold under licence through some 600 Chinese
outlets, reflects the same “outdoor lifestyle” as the vehicles
and can only help them, Manley said in an interview. “It’s kept
Jeep top-of-mind.”
French and Italian car makers meanwhile see China as a clean
slate on which to create a more exclusive image than their
brands enjoy at home.
They are chasing the runaway success of Volkswagen’s
Audi, which accounts for almost one-third of
fast-growing Chinese luxury car sales, followed by a 23 percent
market share for BMW and 21 percent for Daimler’s
Mercedes Benz.
Peugeot, Fiat and Renault are appealing to fuzzier
perceptions of European luxury in a bid to woo Chinese buyers to
“near-premium” cars priced above the mass market but below the
dominant Germans.
Citroen CEO Frederic Banzet wheeled out a concept car called
“No.9” for the Peugeot sister brand’s upscale DS line and said
there was “no coincidence” in the resemblance to Chanel perfume
names. “DS takes its inspiration from the best French luxury
traditions,” he explained.
The long, low-slung show car prefigures a larger sedan and
SUV planned for China after the DS5 mid-sized model to be
imported from June, then assembled with local partner Changan
next year.
The DS range, sold alongside more prosaic Citroen models in
Europe, will get its own Chinese showrooms with a premium feel.
Fiat is also hoping for a branding piggyback. The automaker
is importing a “Gucci edition” of its retro-styled 500 small car
to set the scene for its new Chinese-built Viaggio sedan,
unveiled at the Beijing show for a June launch.
“There’s a huge opportunity for Fiat to speak Italian in
China,” brand CEO Olivier Francois said. The group’s sportier
Alfa Romeo badge could be introduced later through the same
Italian-themed dealerships, according to the company.
“China offers a big chance for these car makers to
reposition themselves with a lot more freedom,” said Manfred
Abraham, head of branding strategy at global consultancy
Interbrand.
While consumers are relatively unaware of past quality
issues, he said, “French and Italian luxury goods are known
everywhere, so to some extent they can trade off that,” he said.
Success in China would throw a lifeline to the French and
Italian car makers as they struggle with mounting losses in home
markets blighted by sagging demand, excess production capacity
and cut-throat discounting.
But Credit Suisse analyst Arndt Ellinghorst is sceptical
about their chances. The mass automakers’ push follows a cooling
of Chinese vehicle market growth – to 2.5 percent last year from
32 percent in 2010 – that has sparked tougher price competition.
“It’s going to be terribly difficult for them to build up
brand heritage,” Ellinghorst said. “Chinese consumers aren’t
naive about product quality and they’re extremely
brand-sensitive.”
Renault China Managing Director Robert Chan acknowledged the
challenge facing the French carmaker’s planned joint venture
with Dongfeng Motor Group and its Talisman “casual
luxury” sedan unveiled at the show.
But Chinese consumer sophistication has “improved to a level
where they are exploring for differences”, Chan said, creating
appetite for “upper-end European style with affordable premium”.
Still, executives and analysts admit, China’s fast-evolving
market brings a degree of unpredictability that can confound the
best forecasts.
Jaguar initially got a lukewarm reception upon entering
China almost a decade ago, when the big cat’s face stared out
from a logo in the centre of its steering wheels, according to
an executive who worked on the British luxury car brand’s
marketing.
“It was considered very bad luck to look a cat in the eyes,”
he said. “But it took ages to figure this out because nobody
wanted to talk about it.”
