Beijing international car show opens for media day, with exhibitors saying
they expect double-digit sales growth in China as markets elsewhere slow down.
BEIJING, CHINA (APRIL 20, 2008) REUTERS -
The Beijing International Automotive Exhibition opened for the media
on Sunday (April 20) with automobile industry executives at the bi-annual auto
show forecasting another boom year in China in 2008.
The exhibition highlights new models from some of China's 100-plus
manufacturers and their foreign partners.
With demand slowing in major U.S., Japanese and European markets,
global brands are looking to China, the world's second-largest auto market, to
fuel growth.
China's auto market has grown by between 20 and 30 percent over the
past five years, a period of explosive growth that analysts and industry
executives say puts it on track to overtake the United States as the largest
market for cars and trucks.
. Global automakers such as Volkswagen AG, General Motors Corp and Ford
Motor Co are increasingly relying on emerging markets such as China to take up
the slack as U.S. and European consumers feel the pinch from slowing economies
and rising prices.
After reaching nearly 8.8 million vehicles last year, the Chinese auto
market is seen growing to 10 million units this year. Double-digit growth is
expected to continue at least over the next five years, exceeding projected
economic growth of 7-8 percent over the same period.
The rate of car ownership in China is still just 44 out of 1,000
inhabitants, according to research cited by Magna International. That is just
one-third of the global average of 120 per 1,000, and far behind 750 for the
United States.
Still, competition is stiffening. In addition to an ever-intensifying
price war among foreign makes, local brands are also stepping up.
Product quality is improving and Chinese manufacturers are inching into
upper segments in the hope of boosting local market share, as well as boosting
their presence overseas.
So far, Chery, Geely and Great Wall -- the top three national brands
with no foreign partnerships in China -- have managed only a 28 percent share
due to their lack of offerings in the 20,000 U.S. dollar (USD)-and-above car
segment, Michael Dunne, managing director of research firm J.D. Power's China
operations, said recently.
Many of China's super-rich are by-passing the Chinese brands to opt
instead for the Audis, Mercedes and other status symbols.
While not quite there yet, the smaller Chinese brands are moving up in
the price range. Chery has the A3 car priced at 13,700 (USD), more than double
what its mainstay QQ sells for.
Geely will showcase its first sport utility vehicle, the NL-1, at the
Beijing auto show, as well as the GC-1 mid-sized sedan, in a departure from
the no-frills, entry-level cars they are best known for.
The car maker plans to develop more than 40 models using 15 vehicle
platforms by 2015.
Geely Group Vice President Frank Zhao told Reuters he had high
expectations for the rest of the year.
"I'm very positive you know, it's going to be double digits that's
for sure. Whether it's 19 percent or 27 percent it's really hard to say. Why?
Because the Chinese market is different from other markets. Because the
average income of the majority of people is very similar that tells you when
one guy is ready to buy a car then almost 1.2 billion people are ready to buy
a car. That's really something quite different from other markets," Zhao
said.
Luxury brands such as Germany's BMW and Daimler's Mercedes division are
also eyeing China's growing elite to boost global demand for top-end vehicles.
BMW's China venture, Brilliance Auto, plans to nearly triple capacity
in the next four years, aiming to produce around 100,000 vehicles a year by
2012.
"We are doing exceptionally well. If you look at the sales in 2007
they were about 43 percent up on the previous year. If you look at the first
quarter of 2008 we are already 40 percent up on 2007. So I think that we can
be confident that as the year progresses we will see at least a good double
digit growth during the rest of this year. And that's about expanding our
operations here, that's about opening new dealerships we'll increase that by
around 30 percent during 2008, and we'll expand our manufacturing operations
by around 40 percent during this year," Ian Robertson, BMW board member
for marketing and sales said.
GM's China sales lagged in the first quarter due to winter storms that
disrupted shipments, but the company, ranked No. 2 by production in China last
year, is forecasting a recovery.
GM expects total China sales to rise about 16 percent in 2008, after
climbing to 6.3 million units in 2007.
Ford is considering building a third assembly plant in China to meet
fast-growing demand for its cars just five years after entering the market,
while Volkswagen's chief executive said he expects the German company to sell
at least 1 million vehicles in China this year.
"I think it's interesting from that perspective that there is
strong growth in luxury products but also strong growth in affordable products
as well as the middle range so that provides a lot of opportunities for all
the different manufacturers to improve their business," John Parker, Ford
Motor company executive vice president said.
GM has said it expects industry sales in China to exceed those in the
United States before 2020, while Volkswagen expects to sell at least one
million vehicles in China this year, the company's chief executive officer
said on Sunday.
In 2007 VW sold 910,000 vehicles in China, one of their biggest
markets.
But a doubling of crude oil prices in the past couple of years has
sparked a worldwide shift towards smaller, fuel-saving cars -- a phenomenon
that China is also embracing.
The Beijing International Automotive Exhibition runs takes place April
20-28, 2008.
