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SHANGHAI – Adopted automakers adequate success in China may be gearing up to booty on bounded players in the high-volume but aggressive low-end market, afterward General Motors’ contempo roll-out of a archetypal priced as low $8,300.

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GM’s move represents a absolute claiming to calm names like Geely Automobile Holdings and Chery Automobile, which accept developed a acceptability for authoritative bargain cars for price-sensitive buyers.

For added than a decade, GM has competed with adopted rivals like Volkswagen in China’s advantageous medium-to-high end segment, abrogation the lower end to civic brands, which now ascendancy about a third of the bazaar affairs to upwardly adaptable consumers concentrated in abate cities.

GM took aim at those brands with the barrage in January of its new Sail beneath the Chevrolet brand, priced at amid 56,800 and 68,800 yuan ($8,314-$10,070). The bristles aperture archetypal is a far cry from GM’s higher-end models in China, alignment from its Buick LaCrosse that costs up to 320,000 yuan, while a top-end Cadillac can amount added than 1.5 actor yuan.

It’s a ample allocation of the bazaar and our job is to attempt wherever the bazaar is, said Kevin Wale, GM’s admiral and managing administrator for China.

As abundance grows in China, now the world’s better auto market, abate civil cities are agilely communicable up with flush littoral cities as above consumers of aggregate from automobiles to collapsed awning TVs and agenda gadgets.

Car sales surged added than 50 percent in additional and third-tier cities aftermost year compared with 26 percent in Shanghai and 32 percent in Guangzhou, according to abstracts provided by Gasgoo.com, a above Chinese auto genitalia trading platform.

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People in abate cities do not accept as abundant money as those in big cities. If a adopted car architect like GM comes up with a archetypal like Sail, it is an acutely adorable offer, said Klaus Paur, administrator for all-around industry consultancy TNS’s North Asia automotive division.

BIG NAMES, LOW PRICES

In befitting with its aim of activity afterwards acquaintance favorites like Chery’s QQ or BYD’s F3, GM apparent the Sail in the civil burghal of Chengdu.

To abutment its low-end initiative, GM is planning a above amplification of its Chevrolet dealership arrangement this year, bringing the absolute to over 500 from about 380 now, said Terry Johnsson, carnality admiral of GM’s China operations. Most of the new dealers will be in abate cities.

GM has already logged added than 30,000 units in backorders afterwards affairs about 8,000 units of the Sail beneath than a ages afterwards its launch.

My wife and I had actuality arcade about for absolutely a while until we saw the new Sail, said Paul Lin, a 27-year old architect hand-in-hand with his 24-year old bride.

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That’s absolutely what we accept in apperception for our aboriginal car, he said at a GM dealership in Shanghai area he aloof put bottomward 5,000 yuan against a new Sail.

The able auction uptake would added than account the thinner margins from cheaper models and could allure added adopted rivals to chase as big-city markets alpha to mature, analysts said.

I bet GM won’t be abandoned out there for too continued as no one can allow to absence out on such a abundant advance opportunity, said Qin Xuwen, an analyst with Orient Securities.

Some of the abutting movers ability be Korean brands, such as Hyundai Motor, already accepted for their almost low prices compared with added adopted brands such as Volkswagen, analysts said.

Foreign automakers were mostly mum on the move by GM, with Ford, Hyundai and Toyota Motor Co adage it would not affect their China plans. Hyundai is already planning to barrage a new abate Sports Utility Vehicle in April and a baby car in September, but it has not provided details.

CHINESE FIGHT BACK

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GM’s move comes as Chinese automakers attending in the added direction, aggravating to augment their angel above that of purveyors of affordable but lower affection goods.

Names like Geely and Beijing Automotive Industry Holding (BAIC) accept fabricated contempo plays to access added high-end bookish property, with the above advancing a accord to buy Ford’s Volvo cast and the closing alive to accommodate designs afresh purchased from GM’s Saab assemblage into its own cars.

But so far, SAIC Motor, China’s better automaker, has been the alone calm cast to accomplish appropriate to the mid-sized and ample car segments with its Roewe sedan, which it developed application technologies acquired from overseas.

The Shanghai-based automaker, which additionally operates collective ventures with GM and Volkswagen, has set an aggressive ambition to bifold its own-brand car sales to 180,000 units this year.

Geely, a low-end player, could additionally accession its contour in China and elsewhere, if it plays its cards appropriate afterward its Volvo purchase, analysts said.

Meantime, BAIC has started amalgam Saab technology into its cartage with an aim to advertise 100,000 self-developed commuter cars in 2011.

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Chinese manufacturers can be acknowledged in the high average articulation and be competitive, said Zhang Xin, an analyst with Guotai Junan Securities. But that will not appear overnight, it takes time.

($1=6.832 Yuan) (Editing by Doug Young and Lincoln Feast)

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