Hawtai wants to make quality cars at a reasonable price. Daniel Bardsley looks at the Chinese manufacturer.
B-plus for China
The Chinese car company Hawtai is nothing if not diverse in its export ambitions. One of its main overseas customers has been the Angolan army, which has bought hundreds of the company's Terracan SUV model, an old Hyundai-designed workhorse that the Chinese military also snapped up by the dozen. But now the Beijing-headquartered firm is also aiming for a wholly different overseas market. It is hoping to prise some of the UAE's luxury and power-conscious motorists away from their Toyota Camrys, Honda Accords and Nissan Altimas and into its new B11 saloon.
Unveiled at the recent Beijing International Automotive Exhibition, the B11 is Hawtai's attempt to position itself as more upmarket than its counterparts from the Middle Kingdom that have focused on exporting cheap hatchbacks and small sedans. "This year is very important for us, because we would like to explore the Middle East market," says Nathan Yang, a manager in Hawtai's international sales section.
If the B11, which will go on sale in China in about three months, proves successful internationally, it will represent a major achievement for a company that until recently only made reheated Hyundais, and that little more than 10 years ago did not even exist. Founded in 2000 by a businessman called Zhang Xiugen, who is also the company president and owner, Hawtai started producing the Hyundai Terracan in 2002, and four years later began manufacturing the old-model Santa Fe, another Hyundai SUV. These vehicles, assembled from complete knock-down kits, were basically just locally made Hyundais, and they even wore the badge of the South Korean company.
Now, though, they are sold as Hawtais and production last year reached about 50,000 units. A small proportion of that went to Africa, a continent where the growing Chinese influence has been well documented. "We've exported more than 1,000 Terracans to the Angolan army and this vehicle is used by the Chinese military," Yang says. "I like this vehicle very much because it's a little bigger than the Sante Fe and it's very much suitable for men."
While as of now Hawtai's production volumes are modest, in recent years the company has invested heavily in its two manufacturing plants, in Erdos and Rong Deng, which both lie in the north of China. Erdos alone will be capable of producing half a million vehicles annually when development is completed. Perhaps most significantly, the Chinese manufacturer's 200-strong team of engineers from South Korea, Germany and China has developed a string of new models. As well as the B11, the company has unveiled its smaller brother, the B21, and an SUV called the B35 based on the Sante Fe platform. A Shanghai design house came up with the shape of all three models, while a German engineering company was tasked with crafting their four- and six-speed automatic transmissions. The B35 is likely to go on sale around the same time as the B11, while buyers will have to wait until next year for the B21.
"These two models [the B11 and B21], they have this unique front that's different from other brands," says Yang. "We want to project the image of masculinity that will be enjoyed by businessmen." Although Hawtai is talking about sending its cars to new markets overseas, achieving success in them is something else, especially given that last year, on the back of the global economic slump, China's car exports fell 46 per cent to 369,600 vehicles.
John Zeng, a Shanghai-based senior market analyst at the Asian Automotive Forecast Service of IHS Global Insight, an economic analysis organisation, says Hawtai's hurdles as it looks to the Middle East include the fact it is new to building saloons and that the company has only had limited exports so far. He says other car makers, such as Geely, Chery and Great Wall, are more experienced at international sales.
Also, the build quality of the new saloon is yet to be determined, as only demonstration cars have been put on show. Zeng believes Hawtai will struggle to match the global brands for quality. "They can offer a much lower price than the global companies. But you have to look at the real quality. You get what you pay for," he says. When The National was shown inside the interior of a blue, 1.8L B11, the quality of the materials seemed to be not far off that found in a comparable Japanese saloon, but fit and finish were poor in some areas. This could have been because the vehicle was a pre-production model. A gold, 2.0L B11 lurking in the same car park appeared to have been finished off much better inside.
Yang is adamant Hawtai could make cars as well as the big international brands it is looking to compete with. Hawtai was not, he insists, a bargain-basement manufacturer. He warns heavy competition on price would lead to the "implosion" of the Chinese car industry, while Hawtai instead wants to "build up our technology and build up our brand". "The other Chinese automakers ? [that] export to the overseas market use the strategy only of low price," he says. "But we don't like it and we won't use it.
"A lot of my partners I have contacted, they told me that the Chinese vehicles in their market, the price is very low but the after-sales service is not very good, and the quality, there are always a lot of problems with the vehicles. We would like to change it. "Maybe it will take a lot of time and investment, but our top target is we'd like to manufacture good quality vehicles at a suitable price."
As a result, while Hawtais will probably be less expensive than their Japanese rivals if they reach the UAE, they will not be ridiculously cheap. Yang said a 10 to 20 per cent saving on the Toyota Camry was likely. Having got to know the GCC market well during his previous job for the pickup producer Great Wall, whose vehicles are a common sight on UAE roads, Yang believes the B11 and the other new models could be popular in the region, and negotiations are already underway with companies experienced in car sales that could act as local partners. The company has not tried to export its Terracans or Santa Fes to the UAE, largely because they are only manufactured with manual gearboxes, which are not popular in the country.
But Yang says that, by the end of this year, Hawtai could send demonstrators of its latest cars (which will be sold with automatic transmissions) to the UAE, ahead of full sales beginning in 2011. He added that the Emirates would make a good location for Hawtai's spare-parts warehousing for the whole region. "I think we should explore the markets step by step," he says. "Maybe next year, we could penetrate the vehicles to some countries, not the whole GCC but maybe one or two countries, and the planned sales volume is about 1,000 units.
"Maybe the UAE will be the first country that we'll penetrate [with] the vehicles, because it has a good policy environment for forming companies. And our group will try our best to make the same level as Japanese vehicles and Korean vehicles in a short time." email@example.com