China: Auto Industry's wild hopes
China: Auto Industry's wild hopes
When were asked:"what gives you hope for the future?" , the automotive executives at the Frankfurt International Motor Show answered the same word: "China".
Sales of cars and trunks are rocketing in Chinese market, compared with other markets,the eyes of auto makers of the world are fixed firmly on the market in China.
"Growth in China is absolutely amazing," said Rick Wagoner, the chairman of General Motors (GM), while at the show, which runs until September 21. "Last month, GM sold more vehicles in China than we did in Germany."
Wagoner's views were echoed by the chief executive of DaimlerChrysler, Jurgen Schrempp. He regards China as the cure for his company's problems. It is easy to understand what is fueling such wild hopes. Automobile sales in China are growing at an annual rate of more than 50 per cent, compared with about 3 per cent in America and Europe, according to the New York Times.
By 2013, Schrempp predicts, China will be the world's second-largest car market, after America, with 8 percent of global sales. In trucks, where it already accounts for a quarter of worldwide demand, China will be the world's largest market within a decade.
Car manufacturers look at China and see a rapidly growing middle class of some 400 million, with rising incomes and a taste for consumer products that will show off their newfound affluence.
The new assembly plant of BMW in Shenyang will turn out 30,000 5-series sedans a year. BMW chairman Helmut Panke expects China to become the largest market for BMW's 12-cylinder engines.
Other firms are also setting up plants inside China to share the market. DaimlerChrysler signed an agreement last week to produce its C- and E-class cars with a Chinese partner, the Beijing Automotive Industry Holding Company. The company also bought a stake in Beiqi Futian, a Chinese truck maker that is controlled by Beijing Automotive.
The venture, the company said, would allow DaimlerChrysler to produce a full range of commercial vehicles, from the relatively simple trucks of Futian to the sophisticated ones of Mercedes.
To some extent, DaimlerChrysler is playing catch-up in China. Most of the global carmakers already have joint ventures there. Volkswagen, an early entrant, controls nearly half the Chinese passenger car market, and is well represented in the luxury range by its Audi brand.
General Motors, which has an assembly plant in Shanghai's Pudong, has had success selling its Buick Regal sedan to Chinese officials and executives at State-run enterprises.
Even Rolls-Royce, the venerable British carmaker owned by BMW, has set up dealers in Beijing, Shanghai and Guangzhou. Its new Phantom can go as high as US$330,000.
However, not every company is joining the eastward march. Renault, [next page]