China’s local auto brands, including Chery and Baojun, are winning back market share this year.
The introduction of new sport-utility vehicles has been a key factor, with the auto segment growing 46 percent in the first six months of the year.
The flood of new models has helped lift domestic brand market share to 39.4 percent, or 1.65 percentage points higher than at the end of 2014.
Local brands have unveiled at least 64 models in the past 18 months, 26 more than the number of new foreign models.
Out of the 21 new, locally-branded models that will debut in the next nine months, 12 are cheaper compact SUVs, according to data compiled by Bloomberg Intelligence.
Due to their lower prices, local auto brands may be less vulnerable to the vehicle registration caps imposed in first-tier Chinese cities.
In less wealthy third-tier cities, where a lack of registration caps makes it easier for less expensive domestic brands to gain market share, sales of local brands grew 12 to 18 percent in the first five months of 2015 compared with the same period a year ago.
Total auto sales in cities with registration caps, such as Shenzhen and Guangzhou, fell 21 percent during the period.
Still, as local brands lag behind their foreign counterparts in reputation, their market share gains may be short-lived. China’s consumers tend to prefer the quality, safety and performance of foreign brands.
Foreign auto makers may recapture market share in China after 2016, when more of their new models are introduced and product launches from local brands are expected to decline.
The views expressed in this article are those of Steve Man, senior auto sector analyst at Bloomberg Intelligence.
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