Looking East

The best-selling passenger car in China is the Volkswagen Lavida.

Quick: What is the best-selling passenger car in China (well, at least as of the results for this past January, which is the most-recent info I have as this is being written)?

Something, perhaps, from Geely, Great Wall or BYD?


How about a product of Chery, Haval or Foton?

Wrong again.

Turns out the best-selling passenger car in China, according to LMC Automotive (lmc-auto.com) is the Volkswagen Lavida. It is in the top spot by a considerable margin over second place, the Buick Excelle. According to LMC, there were 61,568 Lavidas sold in China in January. There were 34,176 Excelles moved (there are two variants, a hatch that is like the Opel Astra and a sedan, like the Verano). The VW badge also adorns the hood of the third-best selling passenger vehicle: the Volkswagen Santana, at 27,770 units.

To give you some sense as to how big those numbers are for Volkswagen—the 61,568, 27,770 and the sum of the two, 89,338—know that in January, Volkswagen of America reported total sales of 23,494 vehicles. That 23,494 includes sales of the Golf, Jetta, Beetle, Eos, Passat Sedan, CC, Tiguan, Touareg, and Routan. And that 89,338 is more than twice the number of Volkswagens sold in Germany in January, which was 41,400. That’s just two models.

Also notable about the situation in China are the top brands. Again, one might think that, yes, Volkswagen is on the top of the list—and it is, with a dominant 17.4% of the market—and that Buick would be right up there, too, and it is, in the third spot of top brands in terms of sales.*

According to LMC Automotive, the top 10 brands in China (again, as of January) are: Volkswagen, Hyundai, Buick, Toyota, Ford, Chevrolet, Nissan, Kia, Honda, and Changan. The last-named may not be familiar to you, but know that the Chinese company has 11 assembly plants in China and two engine plants. It has also established R&D centers in key global locations, including Turin, Italy, Yokohama, Japan, Nottingham, UK, and Plymouth, Michigan—yes, just five miles away from where this is being written.

Now let’s take a look at the top 10 passenger car manufacturers in China: Shanghai VW, Shanghai General Motors, FAW VW, Beijing Hyundai, Changan Ford, Great Wall Motors, Dongfeng Peugeot Citroen, Dongfeng Yueda Kia, Donfeng Nissan, and Changan. Volkswagen, GM, Hyundai, Peugeot Citroen, Kia and Nissan are all in Chinese manufacturing with partners, and one can only assume that the manufacturing equipment and processes that they are deploying there are up to global standards.

How quickly things are developing in the Chinese market can be assessed by considering Great Wall. The company was established in 1984. It claims that it is now the largest SUV and pickup manufacturer in China (and it makes passenger cars, as well), and that as of September 2013, it had 48.279 billion Yuan in assets, or $7.8-billion U.S. It has a goal of the ability to produce 1.5-million units and to sell 1.3-million units by 2015. Its guiding philosophy: “improving little by little every day.” Which sounds a whole lot like kaizen. Which has been a rather successful approach in this industry, to put it mildly.

There is undoubtedly a growing demand for cars in China, which ought to keep the Chinese domestic auto manufacturers busy for quite some time. That is, according to statistics from the World Bank, there are 58 motor vehicles per 1,000 people in China, with “motor vehicles” including cars, buses and freight vehicles, but not two-wheelers. That puts China one ahead of Nicaragua, which is at 57. The number of motor vehicles per 1,000 people in the U.S. is 797. According to the CIA World Fact Book, the estimated population in China as of July 2013 is 1,349,585,838. The U.S.: 316,438,601. Yes, there is a whole lot of upside for Chinese automotive manufacturers.

But anyone who thinks that at some point Chinese manufacturers won’t start looking West, or that the Western companies with facilities in China won’t start doing some serious exporting in order to gain some margins elsewhere in the world, is going to be in some serious competitive trouble.

*In 2013, Buick sold 809,918 vehicles in China. It sold 205,509 in the U.S. It should be pointed out that GM has 12 joint ventures in China and two wholly owned foreign enterprises. It has more than 58,000 employees in China, and sells vehicles under the brands Baojun, Buick, Cadillac, Chevrolet, Jiefang, Opel, and Wuling. Overall for 2013, GM sold 3,160,374 units in China, 2,786,078 in the U.S. And some people thought that former GM CEO Rick Wagoner was focusing too much on China?