No-frills no longer: GM's China brand Baojun attempts a major makeover

By Yilei Sun and Norihiko Shirouzu LIUZHOU, China/BEIJING (Reuters) - By many measures, General Motors' China brand Baojun has been an exceptional success story, growing at breakneck speed by selling low-cost no-frills vehicles in smaller cities and rural areas. But as Chinese consumer tastes shift away from basic and affordable, Baojun is engineering a different image for itself - launching mid-market models that will sport a redesigned logo and be sold through new or revamped showrooms. The move is aimed at ensuring Baojun has offerings in the 100,000 yuan to 150,000 yuan ($15,000-$22,300) range that holds the most potential for the brand, said Mike Devereux, executive vice president at SGMW, GM's venture with Chinese partners SAIC Motor Corp and Guangxi Automobile Group.

Reuters April 17, 2019 06:05:13 IST
No-frills no longer: GM's China brand Baojun attempts a major makeover

Nofrills no longer GMs China brand Baojun attempts a major makeover

By Yilei Sun and Norihiko Shirouzu

LIUZHOU, China/BEIJING (Reuters) - By many measures, General Motors' China brand Baojun has been an exceptional success story, growing at breakneck speed by selling low-cost no-frills vehicles in smaller cities and rural areas.

But as Chinese consumer tastes shift away from basic and affordable, Baojun is engineering a different image for itself - launching mid-market models that will sport a redesigned logo and be sold through new or revamped showrooms.

The move is aimed at ensuring Baojun has offerings in the 100,000 yuan to 150,000 yuan ($15,000-$22,300) range that holds the most potential for the brand, said Mike Devereux, executive vice president at SGMW, GM's venture with Chinese partners SAIC Motor Corp and Guangxi Automobile Group.

"When you look at what might happen in terms of some of the shrinking segments, you are going to make sure you don't put all your eggs in one basket," he told Reuters in an interview.

The first model off the block is the RS-5 SUV, which went on sale last week.

More sleekly designed than other Baojun vehicles, it is the first to feature semi-autonomous driving technology and will be priced from 96,800 yuan to 132,800 yuan. By comparison the most expensive model under Baojun's old badge is priced from 85,800 yuan to 117,800 yuan.

Another three models will be rolled out this year, Devereux said, declining to provide further details on the cars.

GM executives and analysts see Baojun's move upmarket as a natural progression as the brand seeks to stay relevant to younger consumers.

It is also supported by a large existing customer base. Most of Baojun's sales are in smaller and less economically developed cities, but those were areas few Western automakers sought to target and the brand, which only got its start in 2011, rocketed to sales of almost 1 million in 2017.

Amid a slowing economy, sales slipped last year to around 840,000, accounting for 23 percent of GM vehicles sold in China.

For a graphic, click: https://tmsnrt.rs/2X5Th9E

Han Dehong, senior sales manager at SGMW, said the venture had been exploring a makeover of the Baojun brand since 2014 in tandem with a wide-ranging overhaul of its R&D, supply chain and distribution system.

"Younger groups have become the main force of consumer spending in our society and we need to respond to this new younger wave with brand upgrades and revamped models," he said.

NEW SHOWROOMS, BIGGER CITIES

Compared to 10 years ago when there few models in the mid-market price range, competition has become fierce. Popular models include Toyota Motor Corp's Corolla and Volkswagen's Lavida. VW's newly launched Jetta brand, which like Baojun is a China-only brand, is expected to also be sold in the same range.

"Baojun will need a competitive edge," said Yale Zhang, head of Shanghai-based consultancy Automotive Foresight, noting that Volkswagen is known for quality, Geely Autombile Holdings is known for design while Great Wall Motor vehicles offer roomy interiors.

To set itself apart, the revamped Baojun brand will emphasise self-driving technology and internet connectivity, GM officials said.

The new models will be sold in 365 new or refurbished showrooms, equivalent to 60 percent of Baojun stores across China. The brand will also strengthen its presence in bigger cities like Chengdu, Tianjin and Nanjin.

A new mobile phone app was also recently launched, allowing customers to arrange a test drive and buy the new models online.

GM officials declined to say how much the automaker had invested in the new models, the logo redesign and new stores.

The move upmarket for Baojun is partial as some cheaper models will still carry the old Baojun badge although others will be folded into the Wuling brand, - the other marque sold by SGMW, said Matt Tsien, GM's chief in China.

Tsien said GM had little concern that a more upmarket Baojun might eat into sales of GM's Chevrolet as Chinese customers interested in buying a Chevy tend not to be attracted to domestic brands.

Roughly equivalent vehicles would also be priced differently. Whereas the most expensive version of the RS-5 will cost 132,800 yuan, the Chevy Equinox SUV will start from 174,900 yuan.

"No matter how far you take Baojun, Baojun is still going to be domestic, it's going to focus on the local market here and it's going to still represent very good value for customers," said Tsien.

($1 = 6.7167 Chinese yuan)

(Reporting by Yilei Sun and Norihiko Shirozhou; Editing by Edwina Gibbs)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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