Learn Chinese - Hot auto market creates native competition for Detroit

BIZCHINA / Weekly Roundup

Hot auto market creates native competition for Detroit

(AP)
Updated: 2007-04-24 10:38

Shanghai, China With models like the Hover and Roewe, Chinese-brand cars
aren't household names in the United States and other big markets - not
yet, at least.

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But Chinese upstart auto makers with equally obscure names such as Chery,
Geely and SAIC are challenging industry leaders such as General Motors,
Volkswagen and Toyota in the fast-growing China market. They're making
inroads throughout the developing world with an eye toward eventually
entering big Western markets such as the United States.

China's homegrown auto makers vie for attention with global giants such
as GM at this week's Shanghai Auto Show, a biennial event that will
showcase China's phenomenal rise to become the world's No. 2 vehicle
market.

The tenfold jump in China passenger car sales in the past decade has
proved a big boost to General Motors Corp., which has become the market
leader in China even as it loses market share at home. GM's sales in
China last year rose 32 percent to 876,747 vehicles, and Ford Motor Co.'s
jumped 87 percent to 166,722 units.

"Detroit is so cold, but here it's so, so hot," says Yale Zhang, a
Shanghai-based auto analyst with CSM Worldwide.

Demand from newly affluent drivers in China lifted passenger car sales by
37 percent last year to 3.8 million units. China's vehicle market,
including trucks and buses, grew to 7.2 million last year, putting it
second behind the United States with 16.5 million autos sold but ahead of
Japan, with 5.7 million.

Last year's top-selling model was the Jetta, made by FAW-Volkswagen, one
of Volkswagen AG's joint ventures. Even Toyota, a relative latecomer to
China, is gaining ground, with a 66 percent jump in first-quarter sales.

China has required foreign auto makers to partner with local companies,
and the boom has fattened profits for nearly all, Zhang said: "They have
money and they have room to maneuver. It's easier now."

Domestic manufacturers are also getting a lift. Sales of small cars have
surged after the government phased out urban restrictions last year on
sales and use of minicars such as Chery's popular QQ and rival Changan
Automobile Group's CV6, a similarly egg-shaped minicar with a 1.3 liter
engine.

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(For more biz stories, please visit Industry Updates)

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