Domestic Carmakers Finally Step up to Plate at Auto 2006

Probably the biggest change at Auto China 2006, the Ninth Beijing International Auto Show, was the unprecedented presence of China’s domestic-grown brands, forming roughly one third of the 572 vehicles on show at the China International Exhibition Center (CIEC) and National Agricultural Exhibition Center (NAEC) November 19-27.

This reflects their growing strength in one of the world’s fastest expanding auto markets. China has grown into the world’s third-largest auto producer and second-largest auto market after the United States.

In the past, domestic auto producers attached little importance to this international auto exhibition, which has been held every two years in Beijing since 1990 and this year and attracted 600,000 visitors.

The change in attitude appears to represent a shift in mentality from product-oriented to market-oriented as Chinese brands now account for about one quarter of total mainland sales. Carmakers in China sold 5.76 million units between January and October in 2006, an increase of 25.7 percent from 2005, according to the China Association of Automobile Corp.

Auto production in general grew by 27.6 percent to 5.89 million units. Both production and sales for 2006 are expected to top seven million units, according to the association.

Competition increasing

While consolidating their shares in low-end products, Chinese brands are moving into more lucrative markets now dominated by foreign carmakers.

First Automobile Works (FAW), which produced China’s first trucks and cars in the 1950s, showcased 29 vehicles, including 19 using brands of its joint venture partners such as Volkswagen and Toyota, and 10 using its own brands.

The most eye-catching, a new Red Flag (Hongqi) model dubbed HQ3-in its stretched and bulletproof versions-is equipped with a sophisticated infrared night vision system that detects obstacles 250 metres away.

Dongfeng Motor’s own brands include a full range of cars, multi-purpose vehicles, small utility vehicles, race cars and hybrid sedans. Other Chinese carmakers-Geely, the Shanghai Automotive Industry Corporation, Great Wall and Chery-all brought their brand models or new models.

At the 10-day fair, 1,500 manufacturers from 20 countries displayed products, including ten models making their global launch, 92 making their Chinese launch and 39 concept cars.

Luxury showcase

“The biggest difference between this year’s Beijing auto show and previous auto shows in China is that many more luxury and super cars were on display,” said Charles Cheung, an auto analyst for Hong Kong Citigroup. Luxury car sales rose 24 percent during the first eight months of 2006.

Auto China 2006 was the first time all of the world’s top manufacturers-six auto groups and three sedan makers-converged on Beijing. Porsche, Ferrari and Maserati debuted as sedan manufacturers. Leading German automaker Volkswagen announced it had positioned Auto China as one of its three international A-level auto exhibitions, the others being the Paris’s Mondial de l’Automobile and the International Geneva Motor Show.

Daimler-Chrysler, BMW, Ford, General Motors, Toyota and Nissan all stated their commitment to Auto China. On the first day of the fair, visitors could choose the 6.68 million yuan (US$850,000) Bentley NewAzure, that went into production in early 2006, the 6.6 million yuan (US$825,000) limited edition Rolls-Royce Phantom, the limited edition 6.48 million yuan (US$810,000) Bentley Mulliner or the 3.38 million yuan (US$422,500) Continental Flying Spurwere. According to incomplete statistics, all the exhibition autos from Bentley, Spyker, Rolls-Royce were sold, meaning total sales of 35.20 million yuan (US$4.4million).

Three themes

The Certification and Accreditation Administration honoured Guangzhou Toyota Camry with the first energy-saving and environmentally-friendly certificate on the first day of the exhibition.

The award fell in line with two of the three government slogan themes promoted at this year’s show: “energy-saving” and “environmentally-friendly”, after China in July 2006 passed a regulation on the certification of energy-saving and environmentally-friendly vehicles.

When Chery Automobile exhibited its hybrid A5ISG, the first of its kind developed by a Chinese automaker, that move reflected the third theme of the show: “zizhu pinpai” (meaning products with proprietary intellectual property rights).

“The local original equipment manufacturers are jumping on the bandwagon after the central government’s battle cry for ‘zizhu pinpai’,” said Lubo Li, senior director for business and market development for J.D. Power’s Asia-Pacific China operation. Geely Automobile will roll out its own hybrid vehicle based on in-house technology in 2007.

A Sina.com website survey found that about 90 percent of interviewees are optimistic about domestic brand vehicles, and more than 30 percent believe China’s industry has begun innovating.