Viewpoint

Car Makers in China Add More Plants, Dealers and Local Brands

Growth Is So Fast Success Is Measured More by Number of Brands Born Than Units Sold

By Published on .

Most Popular

SHANGHAI -- To put a measure on how much the world has changed in this bustling paradox of a place -- where two-wheeled cyclists overloaded with cardboard cartons still jockey in traffic with gleaming black Audi A8L sedans -- take a step back in time.

Way back. Like 2007.

It was here four years ago that an auto consultant from the United States walked the floor of the Shanghai International Expo Center with a German car maker executive.

The two men stopped that day at the stands of a few Chinese automakers. Curious about the domestic product, they pulled on the handle of a few cars.

And the doors didn't budge.

The Chinese automakers, desperate to make an impact but aware of the lack of execution at that point in their young lives, had locked the doors to avoid the embarrassment of plastic and, in some cases, fake interiors on their cars.

The two men laughed.

"I remember the German guy said, 'They'll never make it, these Chinese,'" the consultant said last week.

Fast forward four years. Here in Hall E5 -- one of 13 halls in 3.2 million square feet of exhibit space (with four more halls under construction) -- the irony is complete. Chinese brands were represented in every hall but one.

And the glitz and sizzle of the Audi, Volkswagen, Seat and Skoda booths shared their space with the glitz and sizzle of JAC China. JAC is a full-fledged Chinese car company that is investing in European styling centers and advanced alternative powertrains.

And JAC's car doors open.

"China is on its own trajectory," said Thomas McGuckin, PwC's Asia Pacific leader. "It's truly breaking away from the rest of the world."

Two auto shows jostled for air time last week. Two worlds just an ocean apart and widening.

In New York, they talked about a cautious recovery. In China they talked about lack of capacity. Ford needs more plants. So do General Motors, Volkswagen, Magna and everyone else.

Foreign brands, like Ford, are opening dealer networks at a pace of two per week.

"The whole market is changing so rapidly, if you have a strategy in place it can change one month later," said Peter Hage, VP of business development at Yan Jun Auto, one of China's leading luxury auto retail groups.

In China today they don't measure success in units sold, but in brands born per month.

GM unveiled a new China-only brand last week. Ford is considering the same. And so is VW.

"We just can't move fast enough," said Joe Hinrichs, Ford's president of Asia Pacific and Africa. "It's this incredible mix of opportunities, risks and complexity."

Mostly, though, it's just unbridled growth. Some say 30 million by 2020; others say 40 million.

Even if the market only grows by 10% this year, that's 1.8 million units -- mind-boggling numbers rivaled only by the mind-boggling head count that's needed. To keep pace, companies like GKN Driveline, a maker of constant-velocity joint sideshafts, are building plants in less than a year -- or about half the time it takes in North America.

"In such a fast-growing environment, this is the kind of thing we must do for our customers," said Marc Vuarchex, managing director of Asia Pacific for GKN Driveline.

Hinrichs, who has been here 18 months after spending most of his life in North America, simply looks out the window of his Shanghai office and shakes his head at the traffic.

It's not the cars on the road, but the boats that race up and down the Huangpu River -- hips full of raw materials, parts and opportunity.

"They go one way full and come back the other way empty. Then turn around and go back full again," he said. "A critical moment in history."

China. The doors are officially open.

ABOUT THE AUTHOR
Jason Stein is editor of Automotive News.
In this article: