Road to top is rough for domestics

Regional dynamics

Regional dynamics are also becoming more of a threat than an opportunity for Chinese automakers.

It is true that, historically, Chinese brands held more of a share in inland provinces than in the coastal regions, and the average growth rate of the inland markets has also traditionally exceeded that of coastal ones.

Such a favorable situation could help Chinese brands gain more ground in the domestic market as a whole.

This conclusion is based on the assumption that Chinese brands are at least able to successfully defend their share in the inland provinces, but in reality this is often no longer the case.

Take Hebei province as an example - Chinese brands previously held more than 35 percent of the market there.

Though the market increased by more than 20 percent in 2012, the share of Chinese brands declined by 1.3 percent.

Despite a positive outlook, domestic brands actually lost some ground in 2012.

The reason is that foreign carmakers began injecting more resources into areas experiencing fast growth.

After realizing they were losing share in these regions, they responded by establishing more dealerships and plants.With these trends in mind, we expect the bumpy road to continue for Chinese carmakers in the coming years.

Instead of looking forward to an increase in the total share by local brands, we rest our hopes in the positive and consistent trends of certain Chinese carmakers.

Some have already successfully developed products that are well accepted in the marketplace, such as the Great Wall H6 and the Geely EC7.

If these success stories can be consistently reproduced over the next two or three generations of their products, it will be more likely that we will see the emergence of a truly world-class Chinese car manufacturer.

The writer is a senior market analyst at LMC Automotive. He can be contacted at bzhu@lmc-auto.com