China car show to open with competition tight
China car show to open with competition tight. - Afp picBEIJING, April 22 — Top world carmakers will roll out a host of new models at China’s leading auto show opening Monday as they scramble for an edge amid sharply slowing sales in the planet’s largest automobile market.
The Auto China 2012 exhibition will see the worldwide launch of 120 new models, 36 of them from international brands, and will include dozens of concept cars and new energy vehicles, according to organisers.
Following record growth in 2009 and 2010 that saw it emerge as the world’s top car market, China’s car sector stalled last year.
The slowdown came after the government rolled back auto-purchase incentives and some cities imposed tough driving restrictions to ease traffic congestion and pollution.
Sales rose just 2.5 per cent in 2011, slowing dramatically from 32 per cent growth in 2010, to reach 18.51 million units. Passenger-car sales grew 5.2 per cent.
“What we had in 2011 was a slowdown of growth, which I would call a normalisation of demand”, said Klaus Paur, a Shanghai-based auto analyst for consultancy Ipsos.
“There is heavy downward pressure on prices. Even if we still have sound demand from consumers in the upper segment and luxury segment, the industry is also suffering from discounts,” he added.
Beijing also earlier this year said it was withdrawing some support for foreign investment in the sector while seeking to further cement cooperation between foreign carmakers and their Chinese partners.
Foreign carmakers have long been required to set up operations in joint ventures with Chinese companies. The government is now pushing such ventures to create more local brands specifically for China’s market. The drive is aimed at securing more technology transfer for the Chinese companies and further raising the profiles of the joint ventures.
“China has realised the importance of branding and that it has not invested enough in that sector”, said Maxime Picat, director of Dongfeng Peugeot Citroen Automobile, a venture between the French carmaker and China’s Dongfeng Motors.
“After 20 years of opening up the industry to foreign carmakers the government drew up a balance sheet and noticed that transfer of technology remained limited.”
General Motors, China’s market leader, launched the first “indigenous” brand — the Baojun — with its joint venture partner Shanghai Automotive Industry Corp during last year’s version of the auto show, which took place in Shanghai.
Japan’s Nissan, meanwhile, has announced plans to market a car line powered entirely by electricity — the Venucia — made in cooperation with Chinese carmaker Dongfeng.
Large-scale sales are not expected until around 2015 due to the need to develop systems for recharging batteries and other infrastructure.
The government hopes the establishment of such brands will polish the image of the country’s car brands in the eyes of Chinese buyers — and later the world — to overcome an association with a lower-quality “made in China” reputation.
“China’s car industry has a unique opportunity to seize, as the centre of gravity for the industry is shifting towards emerging economies”, a statement by organisers said. “To do this, China must increase its capacity to innovate”.
But analysts warn the local joint-venture models could also pose a further challenge to the sales of Chinese carmakers.
Wholly Chinese manufacturers hold just 30 per cent of their home country’s market and most are losing ground or just treading water against international makes, which enjoy better brand recognition and quality reputations.
Analysts say the difficulties at home could drive Chinese carmakers to seek opportunities in overseas markets, including in Europe, where Great Wall Motors has already started producing cars.
“In five years at the latest, China will be in a position to launch a vast overseas offensive,” according to Ferdinand Dudenhoffer, professor at the Automotive Research Centre in Germany.
“China has always looked to acquire new technologies before exporting them,” he said. Chinese carmakers already are selling and producing cars in Africa, India and Southeast Asia.
The auto show runs until May 2. — afp-relaxnews
