China has created a vibrant auto industry over the past two decades, but executives said that a significant gap still separated local manufacturers from the world’s top brands.

“If we want to become a global automotive giant, there is still a long road to travel,” Yin Jiaxu, chairman of China Southern Auto Holdings Corp, was quoted as saying in a Reuters report.
China Southern Auto owns 52.5 per cent of Changan Automobile, Ford Motor’s partner in China. Foreign car makers are eager to increase their share of China’s auto market, which grew by 21 per cent in 2005, amid slowing growth in the more mature North American and European markets.
The fast growth, however, has spurred rapid expansion by the local ventures of the likes of General Motors and Volkswagen, leading to severe price competition and plans to increase exports and profit margins.
Recently, Brilliance Automotive, BMW’s China partner, became the latest with overseas ambitions when it announced plans to export 25,000 of its sedans to Europe next year. Brilliance has an export target of 158,000 within five years, while Changan Auto also has plans to produce 250,000 cars by 2010.
But like the Koreans and Japanese before them, the price advantage enjoyed by Chinese exporters is offset by poor quality, outdated designs and the lack of any brand recognition.
“For Chinese consumers there is still a huge gap between foreign brands and local brands,” said Frank Zhao, the vice president of Zhejiang Geely Holding Group Co.
“But without some leadership or guidance, it will be difficult,” said Zhao, referring to the critical role of the government in nurturing the industry. China aims to lift automotive exports to $120 billion, or 10 per cent of the world’s total vehicle trading volume, in the next 10 years, official media quoted the Ministry of Commerce as saying.
In 2005, such exports reached $10.9 billion, an increase of 34 per cent over 2004.
The mainland is the world’s second largest automotive market and one that is expanding quickly as double-digit economic growth bolsters consumption.
China became a net vehicle exporter for the first time last year.