AS THE Formula One circus rolls into China this weekend, it is easy to forget that last-minute preparations are also being made 650 miles away as its International Exhibition Centre once again opens its doors for the Beijing motor show.
Increasingly perceived as one of the most important showcase events on the auto industry calendar, the Beijing motor show promises to give the best possible insight yet of the future thinking concerning Chinese car companies, writes Jason Craig.
Certainly the balance of power in the car market is shifting – and quickly – to Asia, China especially. Despite having to overcome the worst global recession since the early eighties, it is one of the fastest growing economies in the world.
Geely Auto, who only a fortnight ago acquired Volvo from Ford for $1.8bn, and Shanghai Automotive, who signed a joint venture to the value of $650m with America’s General Motors (GM), will be representing the Peoples’ Republic in the Chinese capital.
They will share centre stage at the expo with Ferrari’s all-new 599 GTO, Mercedes’ CLS estate and Audi’s A8L. Not to be outdone, the Detroit-Shanghai partnership will unveil their cutting-edge Leaf concept, which is a commitment to renewable energy technology.
These world premiers are usually reserved for the likes of New York or Detroit in America, Frankfurt in Germany or Geneva in Switzerland. Already, 17 cars will be shown in the metal for the very first time, comprising concepts and road-going versions.
China returned to double digit growth at the beginning of this year, and was the first to achieve stabilization thanks to total gross domestic output totalling £3tn. Its car industry also posted favourable returns to overtake America to become the world’s biggest with passenger car sales almost doubling to 1.32m in 2009.
“Already China’s companies are performing admirably against their competitors from the west,” she said, “so they deserve to succeed. I hope people in the UK and other European countries will consider buying a Chinese car in the future.”
This was a turnaround in fortunes. In 2008 there will still growth to the tune of 6-7%, but far lower than expected. In fact, it was the lowest recorded figure for almost a decade according to the China Association of Automobile Manufacturers (CAAM). However, the global downturn was an instigating factor, which led to the scaling down of many companies’ production lines, albeit momentarily.
Keen to maintain this sales momentum, the Chinese government has introduced a number of stimulus measures, including sales tax rebates for purchase of small cars and subsidies for buyers in rural areas to ensure much of the state-owned industry prospers, making up as much as 70% of the market share.
Jojo Fei Ye who lives in Wenzhou in the Zhejiang province intends to make the trip to the northern metropolis. The 21-year-old Zhejiang University of Media and Communications (ZUMC) student is hoping that current market and consumer optimism will encourage more people – home and abroad – to support the Chinese car market.
“Already China’s companies are performing admirably against their competitors from the west,” said Jojo. They deserve to succeed.”
The long-term sustainability of China’s car operations will only be achieved if it can appeal to the younger generation of drivers, including graduates like Jojo. In her opinion, forming alliances with GM, Ford and Volkswagen provides the shot in the arm the Chinese industry has long been missing.
“For sure it gives added credibility, which is good. But now there is high expectations and the Chinese people will be watching with interest. The deal with Ford is also important as this will allow Geely – and others – to establish themselves further.”
Reports suggest this deal will be concluded as early as the latter half of this year. Other agreements reached with the Chinese state include Somerset based firm Ariel, who make a low-volume track car, setting up a new production plant in the Eastern Chinese city of Quingdao.
Geely cemented its position as China’s largest automaker by revealing today that it had made a rise in profits from £83m in 2008 to £112m last year, and confirmed that it will invest £580m to bring Volvo back into profitability.
But Jojo stressed that company chief executives should adopt an approach that increases awareness of Chinese car brands without allowing Western thinking to compromise what Geely, SAIC and others represent.
“Of course, when people are buying a car they should be given a viable alternative, but there are design traits that should make it in some way recognisable with its country. Germany is renowned for quality, Japan reliability, so perhaps China could lead with design,” she said.
What will be of concern to company bosses is the apparent lack of promotion relating to the Beijing Motor Show in the national press; when asked, a great many people in the immediate area remarked they were unaware that it was taking place.
This is a story which will have one of two endings: it will either be a spectacular success or a spectacular failure. Few, though, believe it will be the latter, as China’s entrepreneurialism marks the dawn of a new era for the car industry as we know it.
And just like Jenson Button, Fernando Alonso, Mark Webber et al fighting for position at the Shanghai International Circuit , so will China’s car companies come the Beijing motor show. Whatever the outcome, China is in a win-win situation.