China cars manufacturers should invest more in R &D urge Chery Singapore distributor

China automotive manufacturers should invest more in R &D urge Chery Singapore distributor Vertex Automobile.

“China cars will eventually be acceptable international just like those from Japan and Korea.” said Mr Sng Khai Tze, International Business Development Manager of Vertex Automobile in an exclusive interview with Nanyang100. Vertex Automobile is the exclusive distributor for China Chery Automotive, well known for its QQ branded cars.

“But, before they can get there, they need to invest in R & D instead of copying the design from other manufacturers. This lacking of investment in R & D has hampered their progress in penetrating the international markets.”

“For example, there was this China manufacturer that copied another manufacturer engine and modified the engine capacity from 1500cc to 1600cc as a result fuel consumption increased in folds making the car very uneconomical.”

“Engine design is a specialised area that requires investment and major R &D; it is fine if you just copy the design but modification would require in-depth knowledge and research, you can’t just increase the engine cylinder capacity without making modification also to the other engine components” said Sng.

Sng gave the example of Chery Automotive who has started investing in their own R &D and new product development in recent years. The result of these efforts can be seemed in their new cars. The quality of these new car models has improved significantly with fewer defects as compared to previous models. Distributors’ confidence also increased at the same time.

Most significantly is from the reaction from banks and finance companies. It used to be that distributors have to arrange for their own hire purchase financing because banks refused to finance these vehicles made from China. With the improvement in quality and acceptance of customers, banks are now receptive and willing to offer hire purchase finance for China made cars.

Similar for car insurance, insurance companies used to refuse insurance for China made cars but now they now accept them as confident with China made cars improved.

Sng reviewed that when Vertex first brought in Cherry cars three years ago to Singapore, they faced major challenges as the market acceptance and awareness of China car is non existence – unlike Japanese cars.  However, leveraging on the low prices of Chinese cars, they managed to penetrate the market with attractive pricing making car ownership more affordable.

By the end of 2006, they managed to sell 270 cars in Singapore –a very small market with a population of just over 4 millions people. Together with Cherry, Vertex brought in more models to offer better selection and variety. By 2007, 2008, they sold an average of 610 cars a year.

Sng told Nanyang100 that based on history and their experience in selling cars, Chinese cars, just like Japanese and Korean cars, when they first export internationally, faced discriminations and doubts.  China made vehicles will face similar obstacles before they can be a major auto player internationally.

“Compared to the marketing efforts done when Japanese and Korean cars makers first expand into the international market, Chinese manufacturers are still pretty lacking. Furthermore, the Korean and Japanese still have an edge on quality.”

“Other incident such as the recent China milk scandal doesn’t help in Chinese product reputation. The incident has actually affect China made cars sales here.”

“The current global financial crisis has also affected cars sales. “ Sng also reviewed that 30% of hire purchase application were rejected by banks making sales a lot more difficult. 

In a down market, price competitive cars tend to sell better and this is the area where Chinese cars have some advantage.

With the currently weakness in Korean won, Korean cars sales have jumped to the top spot overtaking Japanese make as the most popular make in Singapore. China auto manufacturers will need to invest more in marketing and after sales support to build their brands and acceptance. 

SINGAPORE May 7 (Nanayang100) --