Global Automakers Flirt China

Major car makers gathered in Beijing yesterday for China’s leading auto show, seeking an edge in the world’s largest automobile market after a sharp slowdown in growth.

China emerged as the world’s top car market in 2009, but the sector stalled dramatically last year, with sales rising just 2.5% to reach 18.51mn units, after the government rolled back auto-purchase incentives.

Nonetheless, many of the world’s car makers remain confident of continued steady growth in the Asian nation, where three out of every four new car purchases are by first-time buyers.

Organizers say 120 new models will be launched at the Auto China 2012 exhibition, which runs until May 2 and is expected to attract hundreds of thousands of visitors.
“This big country merits big ambitions,” said Dieter Zetsche, chairman of Daimler and head of Mercedes-Benz Cars.

“So we will continue to build our manufacturing presence all in all, the local car market will double by 2020. In turn, we will double our production capacity here by 2015.”

Daimler will invest about €3bn in China in the coming years in an effort to achieve a sales target of 300,000 units by 2015, he said.

Toyota President Akio Toyoda said the growth of China’s car market was unprecedented in its speed, as he unveiled a new hybrid car his company is building especially for the country of 1.3bn people.

“In 2009, the Chinese car market surpassed the US to grow into the world’s largest market. The speed in which it did so was unlike any other ever experienced,” he said.

China has pledged to invest more than $14bn to develop the technology and infrastructure for clean energy cars in a bid to have more than 5mn on the road by 2020.

Toyota, BMW, Honda and China’s Warren Buffett-backed BYD have all announced they will unveil electric or hybrid cars as part of a total of 88 new energy vehicles to be displayed at the show.

But analysts warn it may still take a long time for the Asian nation to fully embrace an electric future.
“International car makers are all trying to appease the government by showing they are indeed bringing electric vehicles to China,” said Namrita Chow, an analyst at research firm IHS Global Insight.
“Almost every international auto maker has announced plans for electric vehicles in China. But almost all are equally as sceptical of volume sales.”

Car makers are also scrambling to tap markets in China’s second-tier cities where automobile ownership remains starkly lower than in the nation’s major urban centers along the eastern coast.

US auto maker giant Ford recently opened a new production facility in China’s southwest city of Chongqing, while Volkswagen has announced plans to open up a factory in the nation’s westernmost region of Xinjiang.

“We are ready to demonstrate aggressive growth this year in China, the most exciting car market in the world,” said Joe Hinrichs, president of Ford Asia Pacific and Africa.

World number one car maker General Motors unveiled many new vehicles, including two models from its Buick brand. GM’s Chevrolet introduced its midsize Malibu, while Cadillac announced it will begin selling two luxury models this year.

“Car buyers will see once again why General Motors has been the leader among global automakers in China for seven consecutive years,” said Kevin Wale, president of General Motors China, as AFP stated.

Foreign brands still dominate the Chinese market, but the government is trying to shift the balance by seeking to further cement co-operation between foreign car makers and their Chinese partners.

Overseas car makers have long been required to set up operations in joint ventures with Chinese companies.