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Published: Friday, 4/20/2012

Beijing auto show draws vehicles targeted to China

ASSOCIATED PRESS
A Fiat 500 co-designed by the Italian fashion house Gucci is among the vehicles on display in Beijing that have been crafted with Chinese buyers in mind. Automakers are trying to overcome a sales slump in the world's largest automobile market. A Fiat 500 co-designed by the Italian fashion house Gucci is among the vehicles on display in Beijing that have been crafted with Chinese buyers in mind. Automakers are trying to overcome a sales slump in the world's largest automobile market.
ASSOCIATED PRESS Enlarge

BEIJING -- Automakers are bringing sport utility vehicles and luxury sedans designed for Chinese buyers to China's biggest auto show this year as they scramble to keep sales growing amid a slump in the world's biggest auto market's once-explosive demand.

Sales growth in China plunged to just 2.5 percent last year from 35 percent in 2010 as the economy slowed. Sales growth forecast to rebound to about 5 percent this year -- stronger than in the United States or Europe but a challenge for automakers that added assembly lines during the boom.

General Motors Co., Honda Motor Co., Bayerische Motoren Werke AG, and other global brands, as well as ambitious Chinese rivals such as Chery and Geely, are wooing Chinese buyers hard at Auto China 2012, which opens next week. World premieres are planned for three SUVs from Ford Motor Co., a Fiat 500 co-designed with fashion house Gucci, and a Range Rover styled by Victoria Beckham.

Automakers that formerly sold the same models in every market with few changes for local tastes are creating models tailored for Chinese buyers.

As competition heats up, foreign car makers that have invested billions in China are seemingly unfazed by the recent slowdown in sales. Ford on Thursday announced plans for a $760 million factory in the eastern city of Hangzhou that along with an earlier announced expansion in Chongqing will double its China production capacity to 1.2 million vehicles a year.

Companies such as Ford expect to continue benefiting from Chinese preferences for foreign car brands. They also expect the market to get much bigger in the years ahead. Even with 30 million cars on the road, China has just 28 vehicles for every 1,000 people, far below the U.S. level of 800. About 80 percent of auto purchases in China are by first-time buyers.

"You have a lot of potential demand for many years to come," said Michael Dunne, president of Dunne & Co., a Hong Kong industry researcher.

China passed the United States in 2009 in number of vehicles sold, and sales last year totaled 18.5 million.

Automakers expect annual sales in China to rise to 30 million vehicles by 2020. Several hope to double their own sales from 2011 levels by 2015.

Automakers that have made most of their money in big cities on China's prosperous east coast are expanding into lower-income but populous inland areas, which they see as the basis of future growth.

Nissan Motor Co. Ltd., for which China is the largest market, is targeting economically priced cars at lower-income cities while it also tries to sell high-end models, said a Nissan China spokesman, Sharon Shen.

Nissan posted a 22 percent increase in sales in China last year to 1.2 million cars. The country accounts for about 27 percent of Nissan's global sales.

General Motors, China's biggest auto brand with 2011 sales of 2.5 million vehicles, says it expects to boost sales 7 to 10 percent this year, outpacing the market.



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