Just before the end of 2004, Chinese computer maker Lenovo bought IBM’s PC business, a move that will propel it to the No. 3 position in the global market for personal computers.
The Chinese won’t be joining the world’s top 3 automaking nations yet, but they are poised to make their global ambitions felt, particularly in Europe.
Shanghai Automotive Industry Corp. is on the verge of consummating its partnership with MG Rover. And Chery Automobile now says it also will export cars to Europe as early as 2007.
The question for Europe’s volume carmakers is whether they are ready for such new entrants. Luxury brands – especially Porsche and BMW – are doing fine, but Volkswagen, Ford of Europe, Opel and Fiat already have their hands full battling Japanese and Korean competitors.
With overproduction continuing and little relief to be expected from the economy, new entrants in Europe are bound to complicate matters.
In 2005, volume carmakers are facing another year of cutthroat competition in Europe. General Motors Europe is slashing structural costs by E500 million a year. Fiat continues to restructure and VW has repositioned its cars to no longer be the highest-priced models in their segments.
In addition, PSA/Peugeot-Citroen, together with Toyota, will enter the market with three new low-cost models built in Kolin, Czech Republic. And Renault is bringing its low-cost Logan to western Europe.
SAIC and later Chery will enter a crowded field, But Toyota, Kia, Hyundai, Nissan and Mazda have already shown that Asian carmakers can gain market share in Europe.
That’s an example SAIC and Chery will be eager to follow.