Advertisement
Find a Car
Go!

2004 Beijing Motor Show: Part IV


chinese with rolls

chinese with rolls

Enlarge Photo

Beijing Motor Show Index

 

Bigger plans for Chinese Focus concept?

Ford Focus China concept

Ford Focus China concept

Enlarge Photo
At the Beijing Motor show, Ford is showing a concept version of its Focus sedan that it says was heavily influenced by the needs and tastes of the booming Chinese market. “This concept was done for China,” asserts the show car’s design director, Paul Gibson. But in an interview with TheCarConnection, he quickly acknowledges that the prototype hints at what’s to come in other parts of the world, including the U.S. The Focus concept is a bit larger and significantly more roomy than the current subcompact sedan. It’s got a more distinctive design, with a more refined feel and striking details, including LED head and taillights. While that technology remains a bit too expensive for the small car segment, Gibson reveals “a fair percentage” of the show car’s shape will show up in production as the next global Focus.

 

 

Domestic or export?

Volkswagen’s latest expansion renews a critical question about China: whether to export or focus solely on the Chinese market? For Phil Murtaugh, head of General Motors’ China operations, the answer is simple. GM is doubling capacity simply to keep up with growing domestic demand.

Honda exec Sho Minekawa

Honda exec Sho Minekawa

Enlarge Photo
VW apparently wants to do a bit of both, focusing primarily on Chinese market needs, but also exporting perhaps 100,000 units annually. But Honda is the first automaker in China to announce plans for a plant devoted exclusively to exports. The Japanese carmaker’s first venture, in Guanzhou, has been repeatedly upgraded and expanded, and is producing more than 200,000 vehicles annually. It also allowed Honda to develop a supplier network that can meet both the cost and quality demands needed to export cars to Europe, according to Sho Minekawa, CEO of Guanzhou Honda Automobile Co. Honda’s second plant will produce the subcompact Jazz model for Europe, replacing a version of the car now built in Japan. Initial production capacity will be 50,000 units annually, but that’s likely to grow. China has everything necessary to become a globally-competitive export market,” according to Minekawa. Not everyone agrees. Domestic suppliers are one of the biggest problems, with relatively few able to meet global quality and cost targets. But that could change over time, especially if vehicle production capacity begins to finally catch up with market demand, suggests Michael Dunne, chief analyst with Automotive Resources Asia. The homegrown Chinese makers, such as Cherry and Geely seem especially interested in exports and, like the South Koreans and Japanese before them, would likely use low prices as their initial entry into markets outside China.

 

 

More competition, falling profits

Michael Dunne

Michael Dunne

Enlarge Photo
“Where profits lead, capacity follows,” says analyst Dunne. And for foreign manufacturers facing bitter battles for share in markets around the world, China has been the last bastion for unbridled earnings. In the U.S., Dunne notes, a Buick Regal has a profit margin of perhaps $500 a vehicle. In China, that’s closer to $4000. And the same story is true for virtually every manufacturer operating in the Asian nation, with only a few notable failures marring the picture. Sales are continuing to surge — they’re expected to jump almost 30 percent, to five million this year, and exceed ten million by decade’s end — leading many experts to predict more of the same – and industry planners to earmark massive investments for China. Volkswagen, General Motors, Ford Motor Co. and other makers have announced about $13 billion in expansion programs in recent weeks. But Dunne cautions “We’re going to see overkill, just like we have in other industries” competing in China. TV makers, he points out, have about four times as much capacity as they need and have been accused of dumping products overseas. “Everything has a downside,” concedes Heinz-Juergen Preissler, CEO of BMW Brilliance Automotive. The joint venture is just ramping up production of BMW’s 5-Series. But BMW is set to face an onslaught of new luxury competitors, ranging from Lexus to Aston Martin. At all ends of the Chinese market, competition has been steadily driving down vehicle prices — cuts averaging 20 percent have been the norm in recent years. And that is expected to put a squeeze on profits.

 
Follow Us

 

Have an opinion?

  • Posting indicates you have read this site's Privacy Policy and Terms of Use
  • Notify me when there are more comments
 

Have an opinion? Join the conversation!

Advertisement
Advertisement
Take Us With You!
   
Advertisement

More From High Gear Media


 
 
© 2014 The Car Connection. All Rights Reserved. The Car Connection is published by High Gear Media. Stock photography by Homestar, LLC. Send us feedback.