Chinese cars designed for the needs of Chinese customers – that was the promise from the world's automakers gathered at the Auto China 2004 car show in Beijing.
With 1,400 car and auto parts manufacturers on show and more than 400,000 visitors, the event was easily China's biggest-ever car expo organizers said.
It also marked China's coming of age as a car country following a year which saw national sales rise by 75%, overtaking Germany as the world's third largest car market. Among the main exhibitors was General Motors (GM), the world's top automaker and the number two manufacturer in China with about 19% of the market in 2003. In the run up to the show, GM announced plans to invest more than US$3 billion extra in its China operations, pushing sales in a country that is this year alone expected to contribute 20-25% of its forecast US$4 billion worldwide profit.
Speaking to China Economic Review at the Beijing exhibition center, Executive Vice- President of Shanghai GM Chris Gubbey said the bulk of the new cash would be directed at building up the company's engineering operations in China and doubling its output to around 1.6 million units within three years.
He said GM planned to introduce 20 new models by 2007 and was focused on providing Chinese consumers with a growing range of cars designed specifically for their needs.
"China is a very different market to anywhere else," he said, illustrating his reasoning with a simple but effective point: "With our larger cars, for example, many of our owners sit in the back seat, so we have to engineer the interiors with emphasis on comfort, space and control at the rear."
"Take the Regal," he said, pointing to one of GM's top sellers in China under the Buick brand. "That car has had more than 600 engineering changes just for the Chinese market – you simply can't buy a car like that in the US."
GM's US$3 billion investment has made it the latest in a string of major international manufacturers to announce big cash injections for their China operations. Combined with GM's latest announcement, General Motors, Ford, Toyota and Volkswagen – the top seller in China with just over 30% of the market – have between them pledged more than US$13 billion to the China market in the past 10 months alone.
That bullish outlook was on full display at Auto China as carmakers sought to outdo each other in high-tech stage shows and dancing girls, eager to woo both increasingly choosey Chinese consumers and the nation's influential motoring media.
Ford, which came relatively late to China and had less than 1% market share in 2003, brought 21 models to the show, although only three are actually sold in China, and used the event for the global launch of its latest concept car.
With plans for a second factory in Nanjing and its sights on around 10% of the China market, Ford said the size of the launch demonstrated its commitment to bring Chinese consumers the latest in automotive design and technology.
Like GM, Ford Asia Vice President Mark Schultz said the company would produce cars "geared to Chinese needs". Chinese consumers, he said, "are not going to be content with hand-me-down cars".
Other makes on display in Beijing ranged from the budget domestic brand Geely, with cars retailing at around US$4,000, to the ultra-luxurious Maybach, sold by Germany's Daimler-Chyrsler, whose top model carries a price tag in excess of $750,000.
Despite a downturn in prices and a decline in sales growth in the first four months of 2004, manufacturers put on a determinedly optimistic display.
"I don't care about short term up and down," said Katsumi Nakamura, President and CEO of Nissan join venture Donfeng Motor Co, reflecting a widespread outlook. New wheels for China's growing market "Our business is not a one-or two-month business, it's a five-or 10-year business and we're here for the long term."
Auto China also saw the debut for several manufacturers new to the China market, among them British luxury sports brand Aston Martin, owned by Ford, which has yet to make a single China sale. Aston's sales director Bill Donnelly told CER the company planned to open a network of three dealerships by the end of 2004 and was optimistic that China had the potential to overtake Japan as the company's biggest Asian market.
"The biggest challenge for us is customer awareness, that's why we bought the Bond car to the show," he said, pointing to a vehicle bristling with missiles and machine pistols. "James Bond is the most obvious association and it helps customers identify with our brand."
With dozens of brands courting the Chinese car buyer, that push to win hearts and minds is critical. Driving much of the razzmatazz on display at Auto China were manufacturers' efforts to bond Chinese consumers to their brands. It's a strategy the big producers hope will lure in buyers as they roll out car financing programs, seen by many as the next big step for China's car market.
Last year, according to industry studies, more than 80% of car purchases in China were cash buys. As a result manufacturers believe there is a vast untapped pool of consumers without the ready money but willing to buy on finance.
Volkswagen, which operates two Chinese joint venture operations and last year sold more VWs in China than in Germany, said it plans to launch its financing operation at the end of August, beginning first in Beijing and then spreading to other major cities.
"Our strategic aim is to maintain 30% market share," Dr. Barthel Schroder, Executive Vice President of VW China said. "By looking at what is necessary for China and the Chinese consumer we believe that our new products will help us achieve that."
Like rival GM, VW also plans to double its output over the coming three years, Schroder said, with China expected to become the most important market for the VW group as a whole by 2008.
You must log in to post a comment.