China market, a mecca for global carmakers

Shanghai, April 23 (Gasgoo.com) The ongoing 2009 Shanghai auto show that opened on April 20 has attracted so many auto giants from worldwide and is demonstrating that the struggling global auto industry is looking decisively toward China, a huge market that is attracting the world's carmakers to explore competitively for their growth.

China is the only major auto market still growing despite the global economic slowdown. In 2008, the country became the world's largest producer of automobiles, with a world market share of 17.2%, outranking Germany (14.7%) and the US (14.6%). In the first quarter of this year, China overtook the U.S. to become the top seller of cars.

The phenomenal recovery in the Chinese auto market is urging global carmakers such as Daimler AG, General Motors, Toyota Motor and Porsche Automobil to view China not just as an emerging market but, increasingly, the auto industry's central battleground. "The center of gravity is moving eastward," Dieter Zetsche, chairman of Daimler, the parent of Mercedes-Benz, told reporters at the auto show.

Since the beginning of this year, the Chinese government has released a slew of stimulus measures to boost its auto sector and market demand. China's carmakers, flush with cash, are keen to buy foreign brands and technologies. Geely Automobile Holdings Ltd., for instance, is looking to buy Ford Motor Co.'s Volvo.

The buzz and excitement surrounding this year's Shanghai auto show contrasts with the subdued tone of major car shows in North America and Europe. Nissan Motor Co., for example, skipped this year's Detroit show and plans to be absent from Frankfurt's but is making a splash in Shanghai.

Atsuyoshi Hyogo, head of Honda Motor Co.'s China operations, said auto makers at the Shanghai show are witnessing "a major shift in the battleground within the global automobile market from the U.S. to China."

Nick Reilly, head of GM's Asia-Pacific operations, said China is one of the "centerpieces" for the Detroit-based automaker's future. While GM is racing to avoid bankruptcy in the U.S., its business in China is profitable and remains unaffected by the global slowdown.

GM's eventual success in revitalizing itself depends on China, Reilly said. For the company to remain a leader in the global industry, GM needs to be an "industry leader" in China, he said. The company aims to double its annual sales in China to two million units within five years.

Volkswagen AG, GM's major rival in the China market, has announced plans to double its annual auto sales in China to 2 million units by 2018. The top European automaker aims to increase its Chinese market share from the current 19%. Its China ventures Shanghai VW and FAW VW will add four models each year.

Car sales in China are showing surprising resilience. Chinese buyers are responsive to government auto sector stimulus initiatives, such as tax cuts and subsidies on auto purchases. In March, China's auto sales rose 5% to a record 1.11 million units, while March car sales fell 30% in the U.S. and 32% in Japan.

As the only growing major car market in the world, China is the ideal destination for carmakers to launch new models and to draw more buyers to their showrooms. The world's most populous nation of over 1.3 billion people is transforming itself from a "bicycle kingdom" of 20 years ago to a "car kingdom" in the near future. Which promises a huge market that any global automakers cannot afford to miss.