General Motors Targets Young Shoppers With New Baojun Brand in China
While “table tennis, fried rice, spring rolls, and Baojun” doesn’t quite have the same ring to it as “baseball, hotdogs, apple pie, and Chevrolet,” make no mistake that General Motors is trying to make Baojun a household name the same way it has with the Chevrolet brand. Launched this month in China, GM is devoting its new Baojun brand to China’s emerging entry-level market for first-time car buyers in the most populous nation in the world. Aimed at so-called second- and third-tier cities with young working professionals, the brand is pricing its first car, the Baojun 630 sedan, at the equivalent of $9750, putting it within reach to China’s growing middle class. In China, the average per capita income in cities is under $3000 per year, and that number drops below $1000 in the countryside, according to numbers from Bloomberg Businessweek. Translated, the name Baojun means "treasured horse."While the Baojun brand just launched with its own dedicated dealership network, General Motors has expectations of selling 20,000 of the compact sedans this year through four months. Later, Baojun will pick up a rebadged version of the Chevrolet Spark subcompact hatchback, a vehicle set to go on sale in the U.S. for the 2013 model year. All told, GM has the capacity to make 100,000 Baojun 630 sedans per year.The Baojun brand has potential to go downmarket where GM’s Chinese mainstay, Buick, cannot. Partnering with Chinese company SAIC, GM developed Baojun with a 1.5-liter four-cylinder engine from SAIC that makes 105 horsepower. The vehicle is loosely based on the Chevrolet Cruze. “The Baojun brand will make SGMW a more competitive automaker as we roll out a full lineup of passenger vehicles under the nameplate in the coming years,” SAIC-GM-Wuling General Manager Shen Yang said in a statement last year. “We have high expectations for the brand and our first model, the Baojun 630.” Last year, the Chinese market grew 32.4 percent, and it is expected to grow another 10 percent this year. In 2010, GM’s Chinese brands outside its U.S. brands for the first time — 2.4 million overseas versus 2.2 million in the States. Our take: China has become a larger, more important car market than the U.S., and GM, as well as the rest of the industry, knows it. That said, it’s a developing market, and it will still take some time before we see a mainstream vehicle with the quality level we’ve come to expect that can compete with the vehicles already sold here. Sources: Bloomberg (Second Article), General Motors
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