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Carmakers hold high hopes for Beijing show
By Gong Zhengzheng (China Daily)
Updated: 2004-06-10 10:18
Foreign and domestic automakers remain confident about China's auto market,
despite slowing growth in vehicle sales.
The growth in the first four months of this year stood at 28 per cent, down
from 34 per cent for the whole of last year.
Speaking as industry representatives converge at the Beijing International
Motor Show, Ford Motor Asia-Pacific head Mark Schulz said: "What you see for
Ford and other brands of Ford (during the motor show) is a reflection of how
important the motor show and the China market are for Ford."
"No automaker can ignore what happens in the China auto market," said Schulz.
The world No 2 automaker has joined forces with almost all of its affiliated
brands - Volvo, Mazda, Jaguar, Aston Martin, Lincoln and Land Rover - to show
off more than 40 models in an area of 5,000 square metres, making it the biggest
exhibitor of the one-week show.
Ford's new generation Focus concept car will also make its global debut
during the motor show. Schulz said Ford intends to produce the Focus in China.
"The auto industry is contributing greatly to China's overall economy and
will make a bigger contribution in the future," said Bernd Leissner, president
of Volkswagen China Group.
"China's auto market is expected to grow 15 per cent annually by 2020."
Volkswagen, the biggest carmaker in China, has established Volkswagen Group
China, replacing its Asia-Pacific operation, helping the firm become more
attuned to the needs of the China market.
"We will make decisions about our local operations, including purchasing,
marketing and sales, finance and human resources here in China, instead of at
our global headquarters in Germany," Leissner said.
Volkswagen, which sold nearly 700,000 cars in China last year, yesterday
launched the Touran multi-purpose vehicle produced at one of its joint ventures
in Shanghai.
Volkswagen, which plans to invest 6 billion euros (US$7.3 billion) in China
over the next five years, is exhibiting 24 models during the motor show, almost
its entire product range.
"We should not overreact to some changes in the market. China's auto industry
will grow steadily, we expect the growth will double that of China's GDP (gross
domestic product) over a long period of time," said Phil Murtaugh, chairman of
General Motors (GM) China.
GM has announced that it will invest US$3 billion jointly with its joint
venture partners in China over the next three years to more than double its
annual production capacity to 1.3 million vehicles.
"China is potentially the biggest premium car market in the world," said Akio
Toyoda, a board member of Toyota Motor, at the Beijing launch ceremony of its
US-made Lexus luxury sedan.
The Japanese automaker is displaying 13 models, including the Crown, which
will be made in China next year.
"The recent slow down in car sales growth is a temporary adjustment in the
market and we believe growth will remain at 13 to 18 per cent over the next five
years or longer," said Zhu Yanfeng, general manager of First Automotive Works
Corp (FAW).
FAW, the biggest Chinese automaker, is showing 19 models, including those
produced by its joint ventures with Volkswagen and Toyota.
The company aims to lift its annual output to 2 million vehicles by 2008 from
last year's 902,000 units, said Wu Shaoming, assistant general manager of FAW.
Japan's Honda Motor and French PSA Peugeot Citroen yesterday announced the
prices of their newly launched cars in China.
The 1.5-litre Fit notchback, produced by Honda's joint venture in Guangzhou,
the capital of South China's Guangdong Province, will retail at between 109,800
yuan (US$13,260) and 119,800 yuan (US$14,470).
The 1.6 and-2.0-litre Peugeot 307 notchback, made by the French firm's joint
venture with Dongfeng Motor in Central China's Wuhan, will sell at between
148,800 yuan (US$17,500) and 196,800 yuan (US$23,800).
Both of the carmakers said the two models' prices "are in line with
international levels."
Average prices on the domestic car market currently exceed those on the
international markets.
Sales of China-made vehicle reached 4.39 million units last year, including
almost 2 million passenger cars.
Growing concerns for industry
Wang Huailin, a Beijing taxi driver, said he will try his best to avoid areas
near the Beijing International Exhibition Centre, the venue of the motor show,
because of traffic jams.
"It will be extremely difficult for us to travel in that area in the coming
days as so many cars will crowd there, although there will be plenty of business
for taxis," Wang said.
Traffic conditions are getting increasingly worse in many major Chinese
cities, such as Beijing, Shanghai and Guangzhou, as the number of cars grows
rapidly in the nation.
This is one of the main factors which will curb the development of the auto
industry.
"Oil supply and environment will also be great challenges for the auto
industry," said Chen Qingtai, deputy director of the State Council Development
and Research Centre, one of the main government think-tanks.
He predicted that automobiles will consume 138 million tons of oil annually
by 2010, accounting for 43 per cent of China's total oil demand.
Auto oil consumption will grow to 256 million tons by 2020, 57 per cent of
total demand.
"Urban pollution will mainly be generated by automobiles, instead of coal, if
we are unable to effectively control auto exhaust emissions," he said.
Auto exhaustion emission will account for 79 per cent of total air pollution
in Chinese cities by 2005.
There is another major weakness challenging Chinese automakers - the lack of
strong independent development capacities and brands.
The domestic passenger car market is dominated by foreign brands, as almost
all of the world's auto giants have built one or more car plants in China.
More than 90 per cent of passenger cars made and sold in China are foreign
automakers' brands, such as Volkswagen, GM, Honda, PSA Peugeot Citroen, Toyota
and Ford.
However, Chinese companies are not prepared to throw in the towel, although
they lag far behind the big foreign names in terms of development capacity.
"Half of our annual output of 2 million vehicles by 2008 will be our own
brands," said Wu from FAW.
"FAW will launch a host of self-developed passenger and commercial vehicles
in the near future."
FAW's current own brands are the Red Flag sedan and Jiefang truck.
Chang'an Motor Corp, China's biggest mini vehicle producer, said that
domestic automobile brands will continue to control at least 50 per cent of its
total sales.
Chang'an is displaying one new self-developed - CM8 - and two concept cars,
named "Chinese Dragon" and "Sturgeon" on the show.
The company, which has two joint ventures with Ford and Japan's Suzuki, aims
to increase annual sales to 1.5 million vehicles by 2010, up from last year's
410,000 units.
"The motor show demonstrates how foreign automakers are making inroads into
China's auto market as most foreign automakers and we, as independent Chinese
brands, are squeezed into corners," said Li Shufu, chairman of Geely, a
privately owned carmaker in China.
The carmaker, which depends on its own development, produces the low-cost
Geely Haoqing, Merrie, Ulion, Meirenbao and Maple cars.
Geely aims to double its sales to 165,000 cars this year.
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