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China to be world biggest auto making center
Updated: 2005-03-20 16:30

China will become world's biggest auto manufacturing center worldwide in the next three to five years, said leading European consultant organization Capgemini.

International auto companies cannot wait for a share the cake, said Peter Kroll, vice president of Capgemini.

General Motors, Volkswagon, Toyota and Nissan are busy establishing their manufacturing bases in the vast and low-cost Chinese market. Kroll said China has attracted 60 to 80 percent of these companies' total investment in the international market.

A model poses beside a BMW sedan in an auto exhibition in Nantong, East China's Jiangsu Province in this picture taken on March 19, 2005. [newsphoto]

"Whether or not they can gain a success in China will be decisive to the future development of the auto giants," Kroll said.

Many transnational companies have chosen to close down the car factories in their own countries and transfer them to China, meaning China will also become a huge source of car export. Kroll said.

On the other hand, the potential of China's own auto consumption market is great, Kroll added.

Despite having a per captia 1,000 US dollar GDP, China's rising middle class has shown increasing purchasing power. He predicted that China's auto consumption will grow, prices decline and the loans and lease services become more widespread.

Surveys conducted by Capgemini show that the psychic and tastes of Chinese auto buyers are somewhat different from the consumers in other countries.

Kroll said Chinese consumers buy new cars not secondhand ones. When they decide to but a car, they prefer to listen to the advice of family members, friends and colleagues instead of reading related publications or receiving professional evaluation services.

Few Chinese buyers show devotion to a particular brand. They seldom buy the same cars from the same retailer, Kroll said.

Also, 70 percent of the Chinese consumers are first-time car buyers, which means a huge commercial opportunity, said Kroll.

China's entry into the World Trade Organization (WTO) has brought a sharp fall of car taxes. Chinese consumers have great expectations for prices of both imported and domestic-made cars, said Kroll. Many people are now taking a wait-and-see attitude, bringing big pressures to the auto market.

The growing production material costs and higher oil prices complicate the auto industry as a whole.

Kroll said many local auto makers must quickly respond to the question: how will they keep and develop their own brands during the cooperation and competition with the transnational giants?

To solve the problem, he advised Chinese auto makers to learn from the experience of the their Eastern Europeans, who faced the same difficulties ten years ago.

Kroll said the Romanian Dacia auto company is a successful example. It managed to optimize the design, improve quality and cut costs of their own cars with the help of their cooperator Renault's technological platform, management experience and sale network. Not only have they kept the brands, but also seized a larger market share in the country.

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