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Auto China 2004

At the press preview on June 8, Business Beijing was impressed by the massive displays created by car manufacturers, but equally impressed by the vast number of secondary and tertiary industries which have come to the show not so much to drape attractive models over their products, but to do business and make contacts.

Expansion seemed to be the main theme of the vehicle manufacturers; everywhere new product lines were being introduced at all levels. Fascinating additions, included several exotic cars new to China, drew big crowds of reporters and photographers. Most brands seemed to be promoting their green credentials, with ultra-smart compacts and state-of-the-art economy vehicles.

The variety of global manufacturing expertise on display on the upper floors of the exhibition halls is as stunning as some of the new cars being displayed below. Pavilions seemed to be divided mostly by country, which affords the business visitor some interesting comparisons; some marketing cultures seem to be product-display heavy and some to be brochure and salesperson heavy. In quality terms the industry seems to be globally very mature. In true factory of the world style, the local parts makers displays were focused on past supply jobs they had completed for the majors.

With some 30 per cent of the local auto market, Volkswagen, named the exclusive automotive sponsor for the 2008 Beijing Olympic Games, is well ahead of GM, in second position with about 8 per cent. Although not yet on the leader-board, having come to the market late, Ford is making up for lost time; Ford products filled four halls at the International Exhibition site, far more than any other make.

Talk to car industry insiders, and the magic figure of US$1,000 per capita gross domestic product (GDP) is often touted.

"According to international experience, householders begin buying cars as necessities when a country's per capita GDP reaches [that amount]," said Zhang Xiaoyu, deputy director of Chinas Machine Industry Federation, in a June interview.

China's GDP passed that critical US$1,000 point in February. New vehicle sales, which have grown rapidly for ten years, reached 4.39 million units last year, including almost two million passenger cars, and that figure does not include imports.

In the exhibition halls at Auto China 2004, high-end luxury and exotics seemed to take up far more space than is perhaps justified in a market where so few can afford that kind of products, but they were joined by many of the majors showing the end result of large internal programmes to build models specifically for the local market. Compact multi-purpose and small people movers from Nissan, Volkswagen, GM and Ford were on display.

In an interview with China Daily, Chen Qingtai, deputy director of the State Council Development and Research Centre, said that oil supply and the environment would be major challenges for the auto industry going forward. Predicting that cars would account for 138 million tons of oil use annually by 2010, 43 per cent of Chinas total oil demand, he said "Urban pollution will mainly be generated by automobiles, instead of coal, if we are unable to effectively control auto-exhaust emissions."

According to the State Environmental Protection Administration (SEPA), auto emissions will produce 79 per cent of total air pollution in Chinese cities by 2005. There are plans to deal with the obvious pollution aspects of this growth, with SEPA s website outlining a two-stage plan that is expected to culminate in world-class emission standards by the end of this decade. Looking at the stated mileage figures for the ultra-compacts at this years Auto China, there certainly seems to be some industry support for this goal. (Associated Press)