The Chinese groups' multi-brand strategy called into question
- Nowadays, Chinese automotive groups generally have several brands (some of which are under joint ventures). Indeed, these groups have multiplied 100% Chinese brand launches over the last few years, in light of a local market projected to develop rapidly and on a massive scale. This strategy was inspired by the one adopted by US manufacturers in the 20s and 30s when the US market increased to a major extent.
- In China, this multi-brand policy faces the obstacle of the very large number of brands already on the market, consisting of 100% Chinese brands that are already established, and particularly foreign brands, which constitute 70% of the market.
- Chery illustrated this consideration by deciding to bring an end to its multi-brand strategy with the discontinuation in the next four years of the Chinese brands Rely and Riich, and the Cowin range.
- Other Chinese groups like Geely or FAW, are about to follow Chery. In particular, the reason for this trend is the very low volume of sales of certain brands that are 100% Chinese (in the case of FAW and Chery) and by a risk of cannibalisation of a secondary brand by the group'sprimary brand (in the case of Geely and its Emgrand brand).
- So consequently it is the multi-brand strategy of the Chinese groups as a whole which is now being called in question. A reduction in Chinese brands, and even a single-brand strategy could, to the contrary, have the beneficial effect of better positioning of these brands and give them a higher profile in the sales rankings in China compared to foreign brands. The Chinese groups could therefore draw inspiration from the GM Group, which increased Chevrolet's sales volumes by placing its brand on Daewoo models.
