China brings hope, threat to global automakers

Top auto executives projected sales growth of up to 10 percent this year in China, but this lone bright spot among the world's major car markets is also producing ambitious potential rivals to the global auto majors.

At the Shanghai Auto Show, the Chinese industry's premier annual event, domestic producers that have long relied on foreign partners' technology unveiled upmarket models under their own brands that they hope will propel them onto the global stage.

"Even as other markets shrink due to the global crisis, China has taken appropriate and timely policy steps to secure stable economic and car market growth," Toyota Motor Corp President Katsuaki Watanabe told a news conference at the auto show.

"We have even more hopes and expectations for the future of the Chinese market than ever before."

China overtook the United States as the world's largest auto market this year and year-on-year sales growth in March rebounded to more than 10 percent as government stimulus measures helped fuel a recovery in demand.

General Motors Corp's China CEO Kevin Wale told a news conference at the auto show on Monday that his company, which is racing to complete a restructuring that could include a bankruptcy filing, expects its China sales to grow 5 to 10 percent this year.

Japan's Honda Motor also projected its China sales would rise 10 percent in 2009, to 520,000 units.

GM posted a nearly 25 percent year-on-year rise in vehicle sales in China in March to 137,004 vehicles, a monthly record.

"To remain a global industry leader, GM must remain an industry leader in China and Asia Pacific," added Nick Reilly, the company's Asia-Pacific chief.

Lofty Ambitions

But global heavyweights will be facing stiffer competition from Chinese firms in future.

GM's joint venture partner in China, SAIC Motor, said sales of its own-brand passenger cars surged four-fold in the first quarter, although they were still a relatively modest 18,000 units.

China's BYD Co Ltd, a battery maker with lofty ambitions in electric cars, said it expects its auto sales to double this year to about 400,000 units.

And Chongqing Changan Auto Co, Ford Motor Co's China partner, suggested the downturn that has battered so many foreign automakers could give Chinese companies a chance to leap onto the world stage through acquisitions.

"The longer the crisis lasts, the bigger the chance of failure or a scale-down of some American and European automakers," Changan Auto Chairman Xu Liuping told reporters on the sidelines of a news conference on Sunday.

"And that has provided a chance for entry by Chinese manufacturers."

Changan is among several Chinese automakers that have expressed interest in Ford's Volvo car brand, which the Detroit automaker is seeking to sell to raise cash.

But rather than focus on the potential threat from their Chinese peers, foreign auto executives at the Shanghai industry gala were focusing instead on opportunities in the newly crowned world leader among auto markets.

"We are at the moment on the lucky side in this part of the world because the financial crisis hasn't changed our approach or our forecast here in China," Ulrich Walker, head of Daimler AG's Northeast Asia operations, told Reuters in an interview on Sunday.

Nissan Motor Co Senior Vice President Andy Palmer echoed those views at a news conference.

"This year has been turbulent as the global economic and financial crisis shows no sign of abating. Yet, despite the downtrend, China remains a bright spot for Nissan in terms of growth and its potential."

[Source: By Chang-Ran Kim and Fang Yan, Reuters, Shanghai, 20Apr09]

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