Affordable cars dominate in China market

The 2009 Shanghai Auto Show is attracting up to 90-thousand visitors a day, as enthusiastic potential car buyers explore one of the world's most influential auto shows.

For any company looking to profit in China's auto market, designing an affordable vehicle is critical. Money-conscious shoppers are at the Shanghai Auto Show searching for new models that are also easy on the pocketbook.

Viv Guo is a Shanghai resident, and is among the tens of thousands of visitors at the Shanghai Auto Show. She is happy to have found a car that she feels really suits her... a new Ford Fiesta. She says it is fuel efficient and easy to drive in the crowded streets of Shanghai.

Car sales in China hit a monthly record of over 1 million in March, exceeding the US for the third month in a row. 70 percent of the cars sold in China were affordable models that are 1.6 liters or below. This as most car buyers are paying much attention to their spending habits.

But that's only part of the story. Luxury brands are also enjoying remarkable success in China. Mercedes Benz says its first quarter sales in the country jumped 30 percent. And its March sales surged 50 percent year-on-year. The German company says it is upbeat for the whole of 2009.

Noting the resilient purchasing power of domestic consumers, Chinese auto makers are also reviving their domestically-produced engines. They are aiming for the premium end of the car market, which is still dominated by foreign brands. The Chinese brands Chery and Geely are showcasing sedans at the auto show, competing against some of the popular overseas models.