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China's Top SUV Maker Begins Upscale Climb With Luxury Brand

Nov. 11, 2016
Like the Korean and Japanese carmakers before them, Chinese automakers are attempting to move upscale and shed a reputation for cheap rides.

Great Wall Motor Co. said it will introduce a new premium brand to target the high-end market, joining Zhejiang Geely Holding Group among Chinese automakers seeking to upgrade from offering cheap, utilitarian cars.

The SUV maker led by billionaire Chairman Wei Jianjun plans to unveil its upscale WEY brand on Nov. 16, the same week as the opening of the Guangzhou Auto Show, according to a statement from the Baoding, China-based company. The automaker said it will release details about its model lineup and marketing schedule when they’re finalized.

Wei has built Great Wall into China’s biggest SUV maker by offering Chinese consumers spacious models with a higher ride and at cheaper prices than sedans made by foreign brands like Volkswagen and Buick. That strategy helped propel the company to a 33% sales surge last month and has positioned Great Wall for a record year in deliveries.

“It’s time for established local Chinese automakers to go upscale given that they have the technology and product reserves they didn’t have in the past,” said Yale Zhang, a managing director at researcher Autoforesight Shanghai Co. “With a new brand, Great Wall will be able to market higher priced models to consumers that it would have otherwise found difficult to attract using existing brands.”

Great Wall’s H6, the most popular SUV in China this year, starts at 88,800 yuan (US$13,000), less than half the price of the VW Passat sedan. The automaker’s board secretary Xu Hui didn’t immediately return a call seeking comment.

Great Wall fell 1.9% to HK$7.19 in Hong Kong on Friday, the lowest level since July 19, compared with the 1.3% decline in the benchmark Hang Seng Index.

Like the Korean and Japanese carmakers before them, Chinese automakers are attempting to move upscale and shed a reputation for cheap rides. Some startups are trying to leapfrog the process altogether, with NextEV Inc. and Beijing CH-Auto Technology Co. both attempting to start sales with luxury sports cars before unveiling mass market models.

At Geely, billionaire founder Li Shufu last month ushered in a brand called Lynk & Co. The new marque, marketed as more premium than the namesake Geely brand, will be built on technology jointly developed with Volvo Cars.

While Geely can tout its partnership with Volvo to win customers, Great Wall faces a tougher task trying to move upscale, according to Steve Man, a Hong Kong-based analyst with Bloomberg Intelligence.

“It may be a taller order for Great Wall’s marketing team,” said Man. “The automaker has yet to realize the potential of the Haval H8 and H9 SUVs, which have higher price points than its popular H6.”

By Bloomberg News

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