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Will Chinese carmakers be dragons in the Year of the Wood Dragon?

Will Chinese carmakers be dragons in the Year of the Wood Dragon?

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By VJ Bacungan
The world officially entered the “Year of the Wood Dragon” on Saturday.
Chinese astrology considers the year 2024 to be most auspicious, given that it is represented by the most powerful creature in the 12-animal Chinese zodiac. It is especially lucky that it is paired with the nurturing wood element, which signifies improvement and abundance.
This is even better news for the Philippine car industry, which sold a record-breaking 429,807 units in 2023, according to the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI). This is up 21.9 percent from auto sales for the year 2022.
CAMPI said for the year 2024, the local auto industry could reach new heights by breaching 500,000 sales. This would require a jump of at least 16.3 percent from the 2023 figure.
And the carmakers that appear to have the strongest growth potential are from the country that gave us the Year of the Wood Dragon – China.
A bad start
Chinese car brands have, mercifully, improved from the bad, old days.
Who could forget the shoddily built models that inundated the Philippine car market in the 2000s? While Filipinos were attracted by the low prices that easily undercut established Japanese rivals, they sadly got what they paid for.
That’s because these upstarts came standard with “derivative” (nice way of saying “copycat”) design and nausea-inducing stenches from interiors that would fall apart in just a few years of encountering our country’s pockmarked roads.
And it didn’t help that many of the dealerships at the time had catastrophic after-sales, with even the distributors themselves closing shop when sales plummeted and warranty claims piled up.
Early adopters were not only left with cars with next to no resale value and no parts to keep them running, but also a bad taste in their mouths that made them swear off Chinese cars for all of eternity.
A new leaf
But that’s really all ancient history, especially with Chinese brands now entering the top 10 in the country’s annual sales charts.
In 2022, Geely and Foton were ninth and 10th place, respectively, selling 3,942 and 3,471 units. And last year, Geely kept its ninth-place spot with 6,852 sales – outpacing 2022’s eight-placer Kia, which dropped to 10th in the rankings with just 5,033 cars sold.
They accomplished this through the tried-and-tested “more for less” approach. But unlike 15 years ago, Chinese cars today offer attractive, original designs and highly advanced technology, all while heavily undercutting the prices of Japanese, Korean, and American brands.
And from being next to non-existent, aftersales packages from Chinese car brands are now setting the bar for the rest of the industry to follow.
JETOUR Auto Philippines offers a 6-year/1-million-km warranty for its non-electric lineup, along with a 10-year engine warranty. Meanwhile, GWM Philippines up the ante on Thursday by announcing that all its new models will get a 7-year/200,000-km warranty.
Put another way, Chinese automakers decided to unleash their inner Taylor Swift and “shake it off” to make their offerings more attractive than ever.
Huge corporate backing
The huge growth potential of Chinese car brands is also apparent in their corporate structuring and restructuring over the last two years.
JETOUR was officially launched on March 2023 with two young executives at the helm – Autospeedygo’s Yves Licup as president and Gateway Group’s Michael Goho as vice president.
On December 2022, multinational automotive distributor Astara took over the operations of GAC Motor Philippines, which had long been lagging behind other Chinese rivals like Geely, Chery and MG. Astara also announced on November 2023 that it would also be the official distributor of JMC.
Speaking of MG Philippines, which had been one of the strongest brands of The Covenant Car Company Inc., the carmaker’s reins were handed over to MG’s mother company SAIC in July 2023.
And then there’s Astara’s major rival Inchcape, which had taken over the local distributorship of Mercedes-Benz, Jeep, Dodge, Chrysler and RAM on January 2023. The firm added Changan Philippines to its highly prestigious portfolio in August that year.
And given that all of these brands have brought the brightest minds in the local car industry into their ranks, there really seems to be no way to go but up for them.
EV leaders
And then there’s the “trump card” for Chinese car companies – electric vehicles (EV).
China is among the world’s leaders in the production of EVs and batteries. And at the very forefront is BYD, whose local operations were taken over by Ayala automotive arm AC Motors on August 2023.
In fact, BYD is in an ongoing tug of war for global EV sales supremacy. Elon Musk’s Tesla edged ahead with 1.8 million sales in 2023, with BYD close behind with 1.57 million EVs sold.
And given that the Philippine government is expecting local EV sales to reach at least 311,700 units by the end of 2028, Chinese carmakers who have well-priced battery-electric offerings are poised to take a considerable slice of the local auto market.
These figures are expected to swell at least 852,100 EV sales by the end of 2040, which is also the year that the government has targeted to ban the sale of brand-new internal-combustion-engine vehicles.
Much like the Phoenix (or should it be the Dragon?) rising from the ashes, Chinese car brands seem to dead-set in making the most of the Year of the Wood Dragon. And expect them to breathe fire on whoever gets in their way.