Guangzhou Auto Sees 40% Growth as Elite Buy China Brands

  • Sales in 2016 seen at 250,000 even as Chinese car market slows
  • China leaders turning to local brands, GAC Auto's Wu says

Guangzhou Automobile Group Co., whose cars appeared in the Transformers 4 movie, said it expects sales of its own vehicle brand to increase by almost 40 percent next year even as industrywide growth slows in China amid a weaker economic outlook.

Guangzhou Auto expects to sell about 250,000 of its Trumpchi brand of cars in 2016, up from 180,000 this year, according to Wu Song, general manager of its GAC Auto unit. The company will begin sales in the U.S. in 2017 and is targeting to sell a million cars a year by 2020, with most of those deliveries in China, he said.

“We think in the future Chinese consumers will increasingly buy Chinese brands, and we will benefit from that,” Wu said in an interview last week in Dubai. “This is the example that is being set by Chinese leaders and the elite in the country.”

Vehicle sales in the world’s largest auto market are projected to grow at the slowest pace in four years, even after the government cut a sales tax to bolster demand sapped by a moderating economy and summer stock-market rout. Chinese automakers like Guangzhou Auto, which has manufacturing joint ventures with Toyota Motor Corp. and Honda Motor Co., are developing their own brands to reduce their reliance on their foreign partners.

‘Targets Aggressive’

“They have achieved very strong growth this year on the back of demand for Trumpchi cars,” said Song Yang, a Hong Kong-based analyst with Barclays Plc. “Still the targets for 2016 and 2020 seem on the aggressive side, especially as it expands both in China and the U.S. at the same time.”

Guangzhou Auto introduced its Trumpchi brand in 2010 and the marque was featured in the 2014 movie, “Transformers: Age of Extinction,” as part of the automaker’s plans to build awareness in the U.S., Wu said. The company needs to build its brand more before starting sales there, he said. Besides China, the Trumpchi brand is sold in Russia, the Middle East and South America.

The Chinese market will be the focus of GAC Auto in the short term because that’s where the faster growth is, Wu said.

China’s vehicle density of 54 per 1,000 people lags far behind more developed nations, compared with 531 in the U.S. and 404 in Germany. Chinese carmakers have outperformed the market this year with sales of budget-priced SUVs, boosting their share of sales by 2.1 percentage points from a year earlier to 41.7 percent in October, according to data from the China Association of Automobile Manufacturers.

Industrywide car sales will probably expand less than 10 percent next year, with luxury demand almost unchanged and some brands losing market share, Wu said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE