The first-quarter recovery in China’s motor industry could prove only temporary, Li Shufu, chairman of Geely, one of China’s largest private carmakers, has told the Financial Times.
His comments highlight the debate over whether the Chinese economy has turned a corner to sustained recovery. Speaking on the eve of the Shanghai motor show, Mr Li also called for caution among Chinese carmakers looking to profit from the current downturn in the world car industry by snapping up distressed brands such as Volvo, Saab and GM Europe.
“A brand is closely related to its cultural background. Isolated from that background, it is worthless,” he said, stressing that it would be “not very easy” for Geely or any other Chinese carmaker to make a success of a foreign brand acquisition. “A brand is like a person’s name. Even if I change my name to Hu Jintao, I am not Hu Jintao.”
Mr Li played down reports that his company plans to buy Volvo or Saab. “We are highly concerned about the sale of these brands?.?.?.?but we have had only superficial discussions about them so far,” he said.
Commenting on China’s unexpectedly strong first-quarter car sales – which made it the world’s largest light vehicle market for the first time in history – Mr Li pointed to government stimulus measures including tax cuts and subsidies for rural buyers. Last month’s 10 per cent rise in passenger vehicle sales “is driven by a temporary policy” and represents “superficial growth”, he said, noting that “only a strong recovery of the economy can help the Chinese auto market”.
JD Power, the car consultancy, predicts that Chinese passenger car sales will be flat in 2009. Such sales rose only 2.8 per cent in the first quarter, according to Mike Dunne, of JD Power in Shanghai.
Most first-quarter growth came from mini commercial vehicle sales, he noted, adding that “for China to get back on track and gather sustained momentum, exports and foreign direct investment must recapture their previous strength and that’s just not there yet”.