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Beijing auto show spotlights global automakers" hopes for China"s booming market

BEIJING April 17, 2008; Joe McDonald writing for the AP reported that ondisplay at next week"s Beijing auto show: Global automakers" hopes thatbooming China will drive sales this year as demand elsewhere slumps.

General Motors Corp. plans to show 42 models at Auto China 2008.Volkswagen AG is debuting two cars designed with domestic partners for theChina market. More than 100 others ranging from luxury automakers DaimlerAG and Bentley to ambitious Chinese upstarts are showing off compacts,sedans and SUVs.

"The interest is unprecedented for automakers. It"s become one of theindustry"s main events," said Tim Dunne, director of Asia-Pacific marketintelligence for J.D. Power and Associates.

The reason is simple: Sales in China -- already the world"s No. 2vehicle market after the United States -- are forecast to rise by 15percent this year, in contrast to flat or falling sales in the UnitedStates, Europe and Japan.

"Both for volume automobile makers and luxury automobile makers, they all are lookingat China as their main growth engine," said John Zeng, China auto industryanalyst for the consulting firm Global Insight.

Chinese automakers, little known abroad, hope to use the show, whichopens to the press on Sunday and to the public on Thursday, to build globalbrands even as they face growing competition at home from bigger, richerforeign rivals.

China"s Chery Automobile Co. says it will display 26 of its own vehiclesin Beijing, ranging from subcompacts to an SUV. Chery has a deal withChrysler LLC to produce a low-cost automobile for the U.S. market but the releasehas been pushed back as the partners reportedly work on improving thevehicle"s quality.

Another Chinese competitor, Geely Group Ltd., says it will show 23models and a concept, or display, car.

China overtook Japan as the world"s second-biggest vehicle market in2006.

Last year, Chinese drivers bought 5.5 million cars, minivans and SUVsand 3 million commercial vehicles. That was up from a total of just 1.6million vehicles sold in 1997. J.D. Power says sales should grow by 1million vehicles annually through 2015.

Demand is driven by economic growth that has topped 10 percent for thepast five years and reached 10.6 percent for the first three months of thisyear.

"Other developing markets might have fast growth but not the volume andconsistency of China"s growth," Dunne said. "The biggest growth potentialis in China."

The officially endorsed automobile culture has transformed China.

A country that had almost no private cars 15 years ago is crisscrossedby new highways. Ancient city centers have been bulldozed to make way forcar-friendly avenues. Cities are surrounded by American-style shoppingcenters with sprawling parking lots.

But the automobile culture has left major cities choked by smog and rush-hourtraffic jams. It has boosted dependence on imported oil, which worriedcommunist leaders see as a strategic weakness.

Automakers are so eager for a share of China"s market that they arewilling to bear the high cost of two Chinese auto shows -- one in Beijingannually and a second every other year in Shanghai.

Most shows are so expensive they usually are held once every two tothree years. In Europe, the Paris and Frankfurt shows are held in alternateyears. Tokyo"s auto show takes place every other year.

Auto China 2008: www.china-autoshow.com