Investment and product announcements increase
The Chinese government continues easing back on restrictive rules limiting
product and investment programs. Last year, that permitted automakers to launch
a record number of new products, estimated at roughly 70 passenger cars and
light trucks. The number is expected to grow in 2004, according to various
sources. But while Auto China 2004 brings plenty of product news, the event is
bookmarked by investment announcements adding up into the billions. Ford's $1
billion expansion program was dwarfed by GM's release of a $3 billion plan that
would more than double its Chinese production capacity. Meanwhile, Volkswagen
has issued word of its own $5 billion program - though many observers expect the
German automaker to scale that back. Western and Japanese parts suppliers also
are making news in Beijing. PSA Group detailed plans to set up a large research
center in the southern Chinese boomtown of Shenzhen. And Siemens VDO said it
will double the size of its auto gauge venture with partner Wuhu Co. Ltd.
China's consumers want luxury
Not all that many years ago, conventional wisdom suggested
Chinese consumers would want small, inexpensive, and very basic transportation.
Reality is proving very different, as the high-line segment becomes the
fastest-growing piece of the booming Chinese market. While luxury cars account
for only about two to three percent of current sales - estimated to reach
120,000 top-end vehicles in 2004 - automakers are betting the share will surge
with the arrival of more top-end product. On Tuesday, Lexus announced it will
open fourteen Chinese car dealerships in China by mid-2005. Ford is set to start
selling Astons and Jaguars, and Nissan is looking to develop demand for
Infiniti. Even Ferrari is set to begin selling products in China this year.
Cadillac took reporters out to visit the Great Wall on Tuesday, where it
provided a driving opportunity. CTS and SRX models will begin rolling into
showrooms by late in the year, with the XLR to follow in 2005. Initially, they
will be imported, but production of Chinese-made versions of the CTS and SRX
will debut shortly afterwards. "By 2010, China could represent 15 percent to 20
percent of our total volume," Caddy General Manager Mark LaNeve noted. BMW has
just begun producing a version of its 5-Series in Shenyang, meanwhile, and
Mercedes-Benz is preparing Chinese-made versions of its C- and E-Class models.