Foreign car execs see mixed threat from China brands

By Chang-Ran Kim and Michael Wei

SHANGHAI (Reuters) - Local brands took more than a quarter of China's passenger car market last month but foreign executives were mixed in their assessment of the competitive threat, saying quality standards still fell far short of globally acceptable levels.

Homegrown upstarts such as Chery Automobile, Geely Automobile and Great Wall Motor are showcasing new, high-end brands at this week's Shanghai auto show as they aim to grab a slice of the profitable, foreign-dominated segment.

Reaction to the attempt, coming less than a decade after motorisation began in earnest in China, ranged from nervousness to downright scepticism from established global players sharing the floor at the show, which opens to the public on Wednesday.

"I don't find it surprising at all that the Chinese are looking to go into the (high-end) market," BMW AG's global sales chief, Ian Robertson, said at the sidelines of the auto show this week.

"It's a natural progression, and the advantage that Chinese manufacturers have with the large local market is big. I never underestimate competition," he said.

An official at Daimler AG, which along with BMW dominates the global luxury market agreed, although he said success would not be imminent.

"The question is how long will it take for Chinese brands to compete with carmakers from Europe, Japan, and the United States. This will take time," Ulrich Walker, head of Daimler Northeast Asia operations, said.

"The big question is how long, but I'm sure that in future the local brands will also be competitive enough to go abroad and to export their products to our parts of the world."

Nissan Motor Co Senior Vice President Andy Palmer said he had seen a vast improvement in the craftsmanship of Chinese cars from seven years ago when the market -- now the world's biggest -- was just starting to emerge.

A sizeable distance still remained, but he warned against writing off the scope for further improvement.

"Thirty years ago, the image of Japanese cars was that they rusted," he said. "So that's how much things can change."

Beijing Hyundai Motor President Noh Jae Man said the threat was already at hand.

"They are very competitive, and expanding rapidly," he said, pointing to the 30 percent sales jumps at Chery and Geely in the first quarter. "Judging from their performance, they will grow in the future."

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