Letter from Beijing

Local Car Companies Shine at Beijing Auto Show

Green Theme Doesn't Slow Interest in SUVs and Luxury Cars

By Published on .

Chinese car companies like BYD are creating better and safer cars.
Chinese car companies like BYD are creating better and safer cars. Credit: Normandy Madden

BEIJING (AdAgeChina.com) -- Global car companies have rallied around sales growth in China for the past year, but their excitement has reached feverish levels this week in Beijing. The city is buzzing with automakers from across China and the globe who have convened in the capital for one of the world's biggest car shows and the largest to date in China.

Credit: Normandy Madden
China's passenger car sales jumped 45% to 10.3 million units in 2009, and rose 76% in the first quarter of 2010. Most analysts expect double-digit growth to continue for the next several years -- or even decades.

After all, car ownership is still relatively low in China, where fewer than 50 people per 1,000 own a vehicle, compared with roughly 800 per 1,000 Americans and more than 500 cars per 1,000 inhabitants in Germany.

The market is dominated by Volkswagen and General Motors Corp, with 16.6% and 13.4% market share, respectively, last year, but privately-owned Chinese firms are growing fast too.

After sweet-talking guards at the front gate and staff at the registration desk, I received a pass to visit the 2010 Beijing International Automotive Exhibition (also known as Auto China 2010) on press day on April 23 -- or as much of it as I could handle in one afternoon. Nearly 2,100 companies from 16 countries will display almost 1,000 cars between April 25 and May 2 in a venue covering over 200,000 square meters -- equal to about 40 football fields.

The halls were packed with photographers, reporters, car company executives and lots of skimpily-clad young women. Auto shows in western markets have toned down the use of models, letting great cars shine on their own merits, but clearly the trend hasn't caught on in China.

Fashions ranged from ball gowns to metallic dresses with platform boots to bikinis. With a handful of cartoon characters walking the corridors, the show looks like a cross between a karaoke club and a space travel-themed amusement park.

While lacking somewhat in sophistication, the show has scale, energy and ambition befitting a country that is now the world's largest car market by unit sales. Eight-nine models will make a global debut in Beijing this month.

About four-fifths of the new models are made by local car companies like Shanghai Automotive (SAIC), Zhejiang Geely Holding Group, BYD, Dongfeng Motor Group, Great Wall Motor and Chery. They are emerging as serious threats to foreign car makers, particularly American and Japanese firms, just as they are looking to growth in China to offset falling sales at home.

The Beijing show is also about cash. While car shows in the West are geared towards car reporters, dealers, and auto parts suppliers, in China, they also serve as a giant sales office. The country doesn't have enough dealerships to meet the interest of Chinese looking for a new car. After conducting extensive research online, prospective buyers turn up at shows ready to buy, sometimes carrying bags of cash. The AFP reported this week that Rolls Royce sold two models -- one costing $1.3 million -- in the first few hours of the Beijing Auto Show.

Interest in the Beijing show, the nation's largest, has turned heavy traffic on the highway between downtown and the airport, which is located near the auto show venue, into a veritable parking lot.

With 38 models on display, Daimler's Mercedes-Benz drew one of the biggest crowds of the day when it introduced an E-class sedan specially made for China. It features more leg room in the back seat for buyers who sit in back while their chauffeur drives -- a trend that is taking off in the mainland. Ford Motor Co.'s Volvo Cars and Volkswagen's Audi, both of which are popular among senior government officials and wealthy entrepreneurs, have also increased the size of back seats for cars sold in China.

Credit: Normandy Madden
There's plenty of talk in Beijing about Geely, which just finalized a deal to buy Volvo from Ford for $1.8 billion, and is one of the top exhibitors at the auto show. China's largest private car maker sold 334,000 cars last year in China, and plans to sell two million cars by 2015, mostly overseas. Geely put 39 models on display at the auto show, more than any other domestic car firm. But Chinese and western car experts alike are uncertain whether Geely has the experience and stamina to successfully revive Volvo on the global market.

Alongside luxury sedans, SUVs, an extra-long Rolls Royce and the fastest-ever Ferrari road car on display, the auto show was peppered with small energy-efficient cars as part of the overall theme for Auto China 2010, "For a Greener Tomorrow."

Nearly 100 cars on display, including electric cars and hybrids, touted low energy consumption, alternative fuel models and emission reductions. SAIC-owned MG, for instance, unveiled a new supermini concept car called the Zero, GM debuted its all-electric Volt MPV5 concept car, and Toyota displayed its latest gas-electric Prius hybrid and an electric concept car.

These are all encouraging developments in a country choking with pollution, especially since the Beijing auto show demonstrated without question that China's thirst for cars is just getting stronger.

Credit: Normandy Madden
Credit: Normandy Madden

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