Introduction to the Cambodia Car Market
A few years ago visitors to Cambodia’s capital city would develop the impression every car on the streets of Phnom Penh was either a Toyota or a Lexus but fast forward to 2015 and things have started to change.
While it is estimated up to 70% of all cars in the country are manufactured by Toyota, the demand for different automotive brands has expanded at a staggering pace with over 25 authorized distributors operating in a market where new car sales range from 3,000 to 4,000 units per year.
It is generally agreed that up to 95% of new cars sold in Cambodia are either refurbished models or, more commonly, unlicensed grey market imports competing on price against genuine dealers.
The Established Market for Car Brands in Cambodia
In recent years, other Japanese automakers have successfully captured a share of the mid-range car segment including Nissan, Mitsubishi, Isuzu, Subaru and, most recently and prominently, Mazda. Korean brands Hyundai, Kia and Ssangyong have made less of an impact whereas the well-known American brands Ford and Chevrolet are more visible with Ford ranked as the number two selling brand of new units sold annually.
However, even Toyota, the undisputed market leader, only sells 1,000 to 1,500 new units a year while Ford’s reports between 700 to 800 units sold with the remaining top ten distributors selling from 100 to 500 units each year. The high end premium segment accounts for just 10% of new car sales volume but offers a variety of high value options from authorized distributors such as BMW, Audi, Porsche, Range Rover, Jaguar, Volkswagen, Mercedes and even Rolls Royce.
Enter the Chinese Car Dragons
At the same time as international players from Japan, Korea, America and Europe began launching in Cambodia so did a number of brands from the largest car market in the world – China.
In 2010, the top selling Chinese SUV and Pickup automaker Great Wall Motors appointed Worldwide Garage to be the country’s exclusive distributor and opened an impressive showroom on one of Phnom Penh’s busiest boulevards. After testing the market with a mix of commercial and passenger vehicles, they now focus on four key models: the Wingle Pickup, M4 Mini SUV, Voleex Sedan and the Haval SUV.
Despite initial ambivalence towards Chinese brands Great Wall Motor’s sales have steadily grown due to a series of savvy corporate deals with major corporations in the telecom, finance, FMCG and media industries. Recently Worldwide Garage made their largest sales order to date agreeing to provide more than 240 units to Cambodia’s biggest private transportation company which means Great Wall Motors now ranks as one of the top five selling authorised distributors in the country.
Other successful entries of Chinese automakers include Forland which is distributed by the local Worldbridge conglomerate and focuses heavily on the commercial sector with an offering of small, medium and heavy duty trucks that have proved popular with companies in construction. BYD and FAW both entered the market on the back of investments made by Chinese owned taxi operators, but neither brand has been able to find an authorized distributor or generated additional sales deals since that time.
The most significant Chinese brand to enter into Cambodia in the past few years has been GAC Motor which was launched on a wave of media publicity with a major press conference for the signing of an exclusive distribution deal. This was followed by a series of television campaigns promoting GAC Motor as affordable luxury for the mid-range Cambodian market. Sales response has been positive with double digit growth and high profile corporate sales of the GS5 SUV to influential business owners.
The Impact of the Automotive Advertising
According to data from IMS’s media monitoring ADEX database both Great Wall Motors and GAC Motor have significantly contributed to a boost in ad spend by the automotive industry on television and in print media. The automotive advertising category has now become the tenth largest spender overall in the media market spending more than USD $2,500,000 YTD by November 2015 with the car brand sub-category spend reaching nearly $900,000 in the same period.
Mazda is responsible for 60% of total car brand television spending followed by Ford in second place, but most interestingly Great Wall Motors is the third largest spender with GAC Motor in fourth position. Surprisingly other key Japanese brands have spent considerably less on TV with Toyota ranking fifth, Nissan sixth and Izuzu in ninth position while for other international brands Hyundai is seventh, BMW eighth and Chevrolet tenth.
Growing Success of Chinese Brands in the Cambodia Car Market
Chinese auto brands that have succeeded in Cambodia have proven to be those with distributors willing to make major commitments in setting up operations and investing in advertising to introduce their new models to consumers. The advance of Chinese automakers has picked up pace since Great Wall Motors first launched in 2010 and over the past five years other key brands like Forland and GAC Motor have demonstrated their reliability and durability while targeting specific commercial and consumer audiences with success.
Make no mistake that Cambodia is still a Japanese dominated automotive market, but there can be no doubt that Chinese brands have been able to achieve sizable annual sales growth – a fact seen by many industry leaders in China as proof of the competitive potential of their exports to emerging markets.
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