by Marcus Casey

by Marcus Casey

SYDNEY, Jan. 8 (Xinhua) — In 2009 Australia was one of the first markets that Chinese vehicle maker Great Wall targeted to test its potential on the international sales stage for its single and double cab V series working utilities.

Such small trucks are the working vehicles of Australia’s many tradesmen. They store tools in the rear tray, which can also accommodate many other different types of loads. And they are tough.

At a time when the Toyota Hilux dominated the market, Great Wall was suddenly on the scene offering a similar vehicle for around 5,000 Australian dollars (4,051 U.S. dollars) less than the Hilux and other competitors.

Eventually Great Wall introduced the X series four wheel drive SUVs with, again, an extremely competitive starting price of 23, 990 dollars (19,460 U.S dollars).

On top it was in partnership with leading Australian car importer and distributor Ateco, owned by flamboyant Australian businessman and yachtsman Neville Chrichton. Ateco also counts premium brands Alfa Romeo, Citroen, Fiat Maserati and Ferrari in its stable of imports.

It all looked very good to go.

And it did. According to Australia’s annual Federal Chamber of Automotive Industries official figures, Great Wall sold 1,907 vehicles in Australia in its first year. In 2010 that climbed to 6, 690 vehicles, then leapt 8,665 in 2011. Here was a success story in the making.

In 2012 that appeared to be confirmed when Great Wall shifted 11,006 vehicles. It was by then a well known vehicle brand and there was wide market and community awareness of how affordable they were.

And word of mouth brand building is one of the most appreciated by marketers.

There was also a forecast in 2012 that Great Wall would have a 25 percent increase in Australian sales by 2016.

But then the bubble burst.

The vehicles had to be recalled in Australia because they were found to contain asbestos in various components against Australian laws. The image was damaged, but other issues were coming into play as well.

In 2013 sales were down 44.5 percent with 6,105 Great Wall vehicles sold in Australia.

And on Tuesday of this week (Jan. 6) the 2014 figures were even starker. Just 2,637 Great Wall vehicles were sold, a drop of 53.6 percent on 2013’s big tumble.

There are more reasons than the asbestos issue though. Ateco’s communications executive Daniel Cotterill was candid in explaining them to Xinhua.

He says the plunge in the value of Japanese yen made that country’s vehicles much more competitive. Also, Ateco buys cars from Great Wall in China in American dollars. In the boom Australian sales years, the Australian dollar was at or near parity with the U.S. dollar.

In January 2013 the Australian dollar was worth 1.03 U.S dollars. But it had a rapid drop to around 91 cents by mid-2013, further declining in 2014 to the point it is now hovering around 81 U.S cents.

“Because we buy them from China in U.S. dollars, this has led to an erosion of our competitive prices and that has had a big effect,” says Cotterill.

But another factor has been a change in focus in the China headquarters of Great Wall. Cotterill says the new management has been more focused on the domestic market.

“The standards in regard to safety equipment demanded in Western markets are quite different to the ones on domestic Chinese models,” he says.

“Electronic stability control, for instance, is mandatory here in Australia, but there is no requirement for it in China. And it’ s a country where all the cars are made as left hand drive ones, whereas we are right hand drive.

“To convert to right hand drive and set in place other controls is a very big investment for quite a small market. So sections of the factory in China have to be re-tooled, and making cars for the Australian market, given its relatively small size, means that it becomes a boutique operation, and boutique is expensive.”

As a result China’s Great Wall company has decided not to upgrade its Australian conversion plants meaning no new Great Wall models have been released in Australia since 2011.

“That has had a definite effect on sales here,” Cotterill says. “People like to upgrade to newer models, or have new models with upgraded features when buying a new car.”

Another major issue is that the problematic and delayed launch of Great Wall’s H8 SUV has absorbed the management’s focus after test models loaned to Chinese motoring media met with much criticism over problems with its transmission.

Cotterill says that is not an easy fix, and the management is focused on dealing with that domestic problem, and not international export issues.

Despite these frustrations, Cotterill says Australia’s Great Wall partner Ateco sees a future for the manufacturer in Australia.

“China will have more focus over time on exports when domestic demands are better,” he says.

“It is a matter of persistence. And the nature of the business in the long term is that it moves in cycles. Ateco is very confident Chinese manufacturers will develop more models to meet Western standards. And we are in position to invest in the long term, and we will be here in the long term.”

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