Wed, April 22, 2009
Once a mere sideshow, the Shanghai auto show is now a plum destination for the global car industry. And it is no wonder: in a grim landscape, the Chinese market is a rare bright spot.
The Shanghai auto show, which opened to the press design Monday and runs through this week, looks to be a playground for some ambitious players: Japanese and South Korean automakers that have grabbed U.S. market share from the struggling Detroit Big Three, European luxury car makers that anticipate their fastest growth in China, and Chinese automakers that are eager to build global brands.
Chinese vehicle sales hit a record 1.11 million for March, a 5% gain from last year's corresponding period. While that actually represents a significant slowdown for China's auto market, the U.S., where vehicle sales dropped 30% in March, has ceded its title as the world's biggest auto market to China for the third straight month. The government has encouraged domestic consumers to buy cars via tax breaks on compact cars and subsidies for rural communities.
A number of the luxury automakers will be unveiling their new concept cars at the Shanghai auto show. Porsche rolled out Sunday the Panamera, marking Porsche's entry into the sedan market. Mercedes and Audi posted record China sales last month, and while luxury cars still represent a tiny fraction of the market, the companies anticipate high growth potential. First-quarter China sales jumped 30% for Daimler and 14% for BMW.
All eyes will also be on BYD, or Build Your Dream, a Chinese battery maker that surprised the market by when it won backing from Warren Buffett in its ambitious bid to unleash the world's first successful plug-in electric car. The company, led by Wang Chuanfu, aims to double sales to 400,000 cars and unveil five new models all this year.
In their effort to achieve more global clout, Chinese automakers have their work cut out for them. Most of the top domestic automakers, from SAIC Motor to Chery to FAW, all have joint ventures with U.S. or Japanese automakers, which serve to transfer technology to the Chinese companies and provide a piece of the growing Chinese car market to the foreign auto makers.
Meanwhile, General Motors new chief, Fritz Henderson canceled his trip to the Shanghai auto show at the last minute, even though the automaker's China sales soared 24.6% in March, from a year earlier. That sparked speculation that he bowed to pressure from U.S. politicians and administration officials urging a deal between GM and bondholders, as the Detroit automaker discusses a possible bankruptcy filing.
(Tina Wang, Forbes.com)
