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China Should Boost Local Brands to Be Auto Superpower, CAAM Says

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Jan. 8 (Bloomberg) -- China should strive to become an “automotive superpower” to maintain economic growth, by increasing investment in research and encouraging official use of local brands, the head of the nation’s carmakers group said.

The country’s automakers spend less than 2 percent of revenue on research and product development, or about half the global average, Dong Yang, secretary-general of China Association of Automobile Manufacturers, said on his blog yesterday. The government should offer incentives to encourage research and adopt local brands for official use, he said.

China’s brands are losing share to offerings from carmakers such as General Motors Co., Volkswagen AG and Hyundai Motor Co. which count the world’s most populous nation as their biggest market. Industrywide deliveries expanded 4 percent last year, even amid concerns about excess inventory, overcapacity and unhealthy price competition, Dong said.

“China should pursue a strategy of turning itself into an automotive superpower,” Dong wrote in his blog on Sina.com. “The auto industry has become an important pillar of the Chinese economy and is crucial to maintaining stable and relatively fast growth.”

Local automakers’ combined share of sales in China fell 1 percentage point in the first 11 months of last year to 41.3 percent, as German brands gained ground by 2.4 percentage points, according to CAAM data.

CAAM is scheduled to hold a briefing on Jan. 11 to release 2012 data and its forecast for demand in 2013.

To contact Bloomberg News staff for this story: Tian Ying in Beijing at ytian@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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