French car makers like Peugeot, Citroen and Renault have been around for more than 60 years and collective have decent market share in European countries and South America but they struggle badly in South East Asia. Peugeot is the only car maker that performs better than the other 2 brands in Malaysia but is practically non-existent in Indonesia, Philippines and thailand. Renault struggles badly in Malaysia despite heavily promoting the Captur and Koleos models. The cars are priced competitively against German rivals VW and Japanese rivals Honda and Toyota. Combined the monthly sales volume seldom exceeds 100 cars which is not enough for a mass market brand to survive.
The struggle of the these French brands are mainly due to the lack of after sales support and poor reliability in the past. The earlier distributors did not offer good after sales service and parts support leaving many owners in a lurch when the cars had problem. It also compounded the problem when the cars were not reliable and was not topicalised to suit the humid climate. Having a bad reputation for poor reliability and bad after sales service the brand image took a big punishment making it very difficult to sell present models.
Used car dealers are reluctant to accept cars from these brands as it is slow to sell and very few customers would look to buy a French car. All these factors make it an uphill battle to promote the brand. Renault may be actively in F1 but it does nothing for the brand in Asia. Renault tried to promote the sporty models like the Megane R.S. hot hatch but it was too niche and only enthusiasts would buy it. For the average buyer who had such a budget for a hot hatch they would either buy a VW Golf GTI or a used Mercedes A45 AMG. These two cars had much better residual values and could easily be sold in the second hand market.
Citroen recently tried to make a come back with the DS models. The cars look good but again the brand image has been damaged. The brand only appealed to the enthusiasts or the buyers who previously owned a Citroen. It was difficult to convert buyers from Honda, Toyota or Mazda to switch. Even if the buyers from the main stream Japanese brands would buy a European model it would most likely be a BMW, Mercedes or Audi.
The problem is the brand image of the French cars are stuck in limbo. It is neither low end or luxury. It is stuck in the middle to compete with the Japanese and Koreans which are often the preferred choice due to reliability and after sales support and also residual values. I believe it will take many more years before the French brands can make any head way in South East Asia unless they are willing to invest heavily in setting up production bases and reduce the prices significantly to capture market share. Renault did this in India and succeeded so this same formula is needed if it were to succeed in South East Asia.
Wednesday 26 December 2018
Monday 3 December 2018
China's new EVs will be a force to be reckoned with in the near future
I just returned from a business trip to china and all I saw was many hybrid and EVs on the roads and on display in shopping malls and in impressive car showrooms facing the main streets. What does this mean? China's foray into the EV market is growing by leaps and bounds unlike the information that is published in the western media. According to some local Chinese industry observers it is rumoured that 1 in every 3 cars sold in Shanghai alone is either a EV or a hybrid. Fuel prices in China is higher than in South East Asia but it is not as high as in Europe or Japan. The Chinese Government have been giving incentives to local car makers such as BYD, SAIC, Geely and many others to develop more EVs to help reduce air pollution. China's megacities are by far among the worst in the world in terms of quality and reducing the amount of smog by using EVs seems to be working.
The development of the EVs in China have been impressive. The Chinese car makers acknowledge that it will be a huge task for them to catch up to the Europeans or Japanese in terms of combustion engine technology so they shifted their focus to EVs which is easier to develop and also the most critical point is that all the materials needed to make the EV is readily available in China. China is the largest battery producer in the world and is the electronics manufacturing hub of the world. Accessibility for the required components is easy. Having said that many ex-Tesla engineers were also pinched by China car companies to help with the development of their EVs. This basically allows them to leapfrog the other car makers and be able to play at the front of the EV market.
Tesla is too expensive for many of the average Chinese buyers but a locally developed and produced EV with similar size and perhaps 60% of the performance capability of the Tesla at half the price would appeal to a big number of Chinese buyers. The incredible thing about the EV development in China is not just about creating the car but the infrastructure they have planned for it. For the new car company NIO that only produces EVs (and currently makes the fastest EV to lap the Nurburgring) they already have a battery swapping network in place across China. They claim that they can swap out a battery in under 5 minutes and replace it with a fully charged unit. This is as quick as refuelling at a gas station for a regular combustion engine car. This is solving a few issues that have been concerns of potential EV buyers. The range issue is solved and the battery life problem is also solved.
The design of the cars now look modern and come fully loaded with functions such as voice command, lane departure warning, traction control, blind spot warning system, interactive infotainment system and many more.
The car shown above is the Roewe Marvel-X which is owned by SAIC. this mid sized SUV comes in 2 variants, a basic 2WD and fully loaded 4WD version. On paper it claims to offer a 500km driving range when cruising at 60kph but in reality I would expect a realistic driving range of 380-400km since when you run the air conditioning and audio system and lights it will reduce the driving range. The car is capable of 0-100kph in 4.8 seconds. It is impressive to say the least and the expected selling price in China before subsidies is RMB200,000.
It claims to be able to achieve 80% charge in 40 minutes from a fast charger. This is good since many other Japanese EVs take much longer to charge.
Next comes the NIO ES8 SUV. This SUV is much larger and capable of seating 7 people. It has a driving range of 350km but the battery swap takes just 5 minutes. This car comes fully loaded is expected to cost US$60,000. The interior design is very cool and the build quality is top notch with nice materials used.
From what can be seen in China it can be said that the yardstick for the EV market just moved much further than I expected and I would also say that the Japanese car makers need to wake up and play the catch up game. The current offerings from Japan fall way short of what China has to offer. If the big guns in Japan remain asleep they will soon find themselves out of the game altogether. While the Japanese car makers still use the out of date Nickel metal hydride batteries for the EV, China is already using Lithium ion and soon lithium polymer batteries. I personally feel that the Japanese car makers have fallen far behind the EV industry. They will need something amazing to close the gap.
China and the European car makers are really pushing the development of EVs to a new level. It won't be long before China's EVs hit the world market. So far the EVs are only being sold in China but once the cars gain sufficient popularity in China the car makers will start to venture to other countries.
The development of the EVs in China have been impressive. The Chinese car makers acknowledge that it will be a huge task for them to catch up to the Europeans or Japanese in terms of combustion engine technology so they shifted their focus to EVs which is easier to develop and also the most critical point is that all the materials needed to make the EV is readily available in China. China is the largest battery producer in the world and is the electronics manufacturing hub of the world. Accessibility for the required components is easy. Having said that many ex-Tesla engineers were also pinched by China car companies to help with the development of their EVs. This basically allows them to leapfrog the other car makers and be able to play at the front of the EV market.
Tesla is too expensive for many of the average Chinese buyers but a locally developed and produced EV with similar size and perhaps 60% of the performance capability of the Tesla at half the price would appeal to a big number of Chinese buyers. The incredible thing about the EV development in China is not just about creating the car but the infrastructure they have planned for it. For the new car company NIO that only produces EVs (and currently makes the fastest EV to lap the Nurburgring) they already have a battery swapping network in place across China. They claim that they can swap out a battery in under 5 minutes and replace it with a fully charged unit. This is as quick as refuelling at a gas station for a regular combustion engine car. This is solving a few issues that have been concerns of potential EV buyers. The range issue is solved and the battery life problem is also solved.
The design of the cars now look modern and come fully loaded with functions such as voice command, lane departure warning, traction control, blind spot warning system, interactive infotainment system and many more.
It claims to be able to achieve 80% charge in 40 minutes from a fast charger. This is good since many other Japanese EVs take much longer to charge.
Next comes the NIO ES8 SUV. This SUV is much larger and capable of seating 7 people. It has a driving range of 350km but the battery swap takes just 5 minutes. This car comes fully loaded is expected to cost US$60,000. The interior design is very cool and the build quality is top notch with nice materials used.
From what can be seen in China it can be said that the yardstick for the EV market just moved much further than I expected and I would also say that the Japanese car makers need to wake up and play the catch up game. The current offerings from Japan fall way short of what China has to offer. If the big guns in Japan remain asleep they will soon find themselves out of the game altogether. While the Japanese car makers still use the out of date Nickel metal hydride batteries for the EV, China is already using Lithium ion and soon lithium polymer batteries. I personally feel that the Japanese car makers have fallen far behind the EV industry. They will need something amazing to close the gap.
China and the European car makers are really pushing the development of EVs to a new level. It won't be long before China's EVs hit the world market. So far the EVs are only being sold in China but once the cars gain sufficient popularity in China the car makers will start to venture to other countries.
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