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Automakers step up in China as West wobbles
By Fang Yan and Chang-Ran Kim
Automobile industry executives at Beijing's bi-annual auto show forecast another boom year in China in 2008, with sales in the world's No. 2 car market rising and production ramping up to take advantage of lower costs.
Global automakers such as Volkswagen AG (VOWG.DE), General Motors Corp (GM.N) and Toyota Motor Corp (7203.T) are increasingly relying on emerging markets such as China to take up the slack as U.S. and European consumers feel the pinch from slowing economies and rising prices.
"I say this internally all the time, but the company that gets China right is going to be the dominant player for the next 25 years," GM Chief Executive Rick Wagoner said at the Beijing Auto Show.
GM's China sales lagged in the first quarter due to winter storms that disrupted shipments, but the company ranked No. 2 by production in China last year is forecasting a recovery.
"We still expect a very good year and to grow in line with the market," GM's president and managing director Kevin Wale said.
GM expects total China car sales to rise about 16 percent in 2008, after climbing to 6.3 million in 2007. Most executives predicated the whole auto market, including trucks and buses, to reach 10 million units this year.
As big as the Chinese car market has become, just 44 out of every 1,000 people owns a vehicle, compared with an average 600 for the developed world and some 800 for the United States.
The number of vehicles on Chinese roads last year reached 47 million, parts maker Magna International said, a level equivalent to where the United States was in 1947.
"All the fundamentals are really, really good (for China to keep growing)," said Magna International Asia Pacific Executive Vice President Frank O'Brien.
Carlos Ghosn, chief executive officer of Nissan Motor Co (7201.T) and Renault SA (RENA.PA), agreed.
"If China is going to become the world's second-biggest economy -- if not the biggest -- you can expect the (per capita sales) number to reach at least 600," he told reporters at the auto show.
"You can imagine the growth prospects."
MORE CAPACITY
Banking on those prospects, Ford Motor Co (F.N) is considering building a third assembly plant in China to meet fast-growing demand just five years after entering the market, while Volkswagen's chief executive said he expects the German company to sell at least 1 million vehicles in China this year.
Luxury brands such as Germany's BMW (BMWG.DE) and Daimler's (DAIGn.DE) Mercedes division are also eyeing China's growing elite to boost global demand for top-end vehicles.
BMW's China venture, Brilliance Auto, plans to nearly triple capacity in the next four years, aiming to produce about 100,000 vehicles a year by 2012.
Qi Yumin, chairman of Brilliance Auto, the state parent of the Hong Kong-listed unit, Brilliance China Automotive Ltd (1114.HK)(600609.SS), said the company was still in talks with BMW to build a second plant in China, but gave no further details.
Despite BMW's aggressive growth plan, the chief executive of Daimler, Dieter Zetsche, said he was convinced his Mercedes Benz unit, which launched its GLK small SUV in China at the show, would overtake BMW in the market.
But with soaring oil costs a major challenge facing the auto industry, many carmakers are shifting their focus to smaller, cheaper, more fuel-efficient models -- despite the threat to margins.
Honda Motor Co (7267.T) unveiled on Sunday the new Fit subcompact for China, while Toyota did the same with its rival car Yaris.
Japan's Mitsubishi Motors (7211.T), meanwhile, said it is developing a low-cost car that it aims to start selling in China and elsewhere from around 2010. The car, expected to be priced under $10,000, would be based on a 660cc mini-vehicle platform currently only used in Japan, President Osamu Masuko said.
Mitsubishi Motors also announced plans to nearly double capacity at two Chinese engine plants in which it has minority stakes. The plant sells to 20-some local carmakers, but Masuko said China could eventually become an export base for Mitsubishi engines to supply other countries, thanks to its lower cost base.
Reducing production costs is taking on greater urgency as major developed markets stumble.
Mitsubishi said its 2008 U.S. sales target would be tough to achieve, given industry-wide forecasts for sales to fall as low as 14.5 million vehicles. For the first three months of 2008, the U.S. market shrank 6.2 percent from the year earlier.
But Nissan's Ghosn sounded a brighter note, saying he was not revising down his forecast for 2008 U.S. industry sales of 15.5 million units.
"I don't believe it will be below this," he said, though adding the risk was on the downside.
"The economy in the United States is adjusting very quickly."
($1=103.65 Yen)
(Additional reporting by Jong-woo Cheon, Marcel Michelson, Kevin Krolicki; Writing by Lincoln Feast; Editing by Ken Wills)
http://news.yahoo.com/s/nm/20080420/bs_nm/autoshow_dc_2
By Fang Yan and Chang-Ran Kim
Automobile industry executives at Beijing's bi-annual auto show forecast another boom year in China in 2008, with sales in the world's No. 2 car market rising and production ramping up to take advantage of lower costs.
Global automakers such as Volkswagen AG (VOWG.DE), General Motors Corp (GM.N) and Toyota Motor Corp (7203.T) are increasingly relying on emerging markets such as China to take up the slack as U.S. and European consumers feel the pinch from slowing economies and rising prices.
"I say this internally all the time, but the company that gets China right is going to be the dominant player for the next 25 years," GM Chief Executive Rick Wagoner said at the Beijing Auto Show.
GM's China sales lagged in the first quarter due to winter storms that disrupted shipments, but the company ranked No. 2 by production in China last year is forecasting a recovery.
"We still expect a very good year and to grow in line with the market," GM's president and managing director Kevin Wale said.
GM expects total China car sales to rise about 16 percent in 2008, after climbing to 6.3 million in 2007. Most executives predicated the whole auto market, including trucks and buses, to reach 10 million units this year.
As big as the Chinese car market has become, just 44 out of every 1,000 people owns a vehicle, compared with an average 600 for the developed world and some 800 for the United States.
The number of vehicles on Chinese roads last year reached 47 million, parts maker Magna International said, a level equivalent to where the United States was in 1947.
"All the fundamentals are really, really good (for China to keep growing)," said Magna International Asia Pacific Executive Vice President Frank O'Brien.
Carlos Ghosn, chief executive officer of Nissan Motor Co (7201.T) and Renault SA (RENA.PA), agreed.
"If China is going to become the world's second-biggest economy -- if not the biggest -- you can expect the (per capita sales) number to reach at least 600," he told reporters at the auto show.
"You can imagine the growth prospects."
MORE CAPACITY
Banking on those prospects, Ford Motor Co (F.N) is considering building a third assembly plant in China to meet fast-growing demand just five years after entering the market, while Volkswagen's chief executive said he expects the German company to sell at least 1 million vehicles in China this year.
Luxury brands such as Germany's BMW (BMWG.DE) and Daimler's (DAIGn.DE) Mercedes division are also eyeing China's growing elite to boost global demand for top-end vehicles.
BMW's China venture, Brilliance Auto, plans to nearly triple capacity in the next four years, aiming to produce about 100,000 vehicles a year by 2012.
Qi Yumin, chairman of Brilliance Auto, the state parent of the Hong Kong-listed unit, Brilliance China Automotive Ltd (1114.HK)(600609.SS), said the company was still in talks with BMW to build a second plant in China, but gave no further details.
Despite BMW's aggressive growth plan, the chief executive of Daimler, Dieter Zetsche, said he was convinced his Mercedes Benz unit, which launched its GLK small SUV in China at the show, would overtake BMW in the market.
But with soaring oil costs a major challenge facing the auto industry, many carmakers are shifting their focus to smaller, cheaper, more fuel-efficient models -- despite the threat to margins.
Honda Motor Co (7267.T) unveiled on Sunday the new Fit subcompact for China, while Toyota did the same with its rival car Yaris.
Japan's Mitsubishi Motors (7211.T), meanwhile, said it is developing a low-cost car that it aims to start selling in China and elsewhere from around 2010. The car, expected to be priced under $10,000, would be based on a 660cc mini-vehicle platform currently only used in Japan, President Osamu Masuko said.
Mitsubishi Motors also announced plans to nearly double capacity at two Chinese engine plants in which it has minority stakes. The plant sells to 20-some local carmakers, but Masuko said China could eventually become an export base for Mitsubishi engines to supply other countries, thanks to its lower cost base.
Reducing production costs is taking on greater urgency as major developed markets stumble.
Mitsubishi said its 2008 U.S. sales target would be tough to achieve, given industry-wide forecasts for sales to fall as low as 14.5 million vehicles. For the first three months of 2008, the U.S. market shrank 6.2 percent from the year earlier.
But Nissan's Ghosn sounded a brighter note, saying he was not revising down his forecast for 2008 U.S. industry sales of 15.5 million units.
"I don't believe it will be below this," he said, though adding the risk was on the downside.
"The economy in the United States is adjusting very quickly."
($1=103.65 Yen)
(Additional reporting by Jong-woo Cheon, Marcel Michelson, Kevin Krolicki; Writing by Lincoln Feast; Editing by Ken Wills)
http://news.yahoo.com/s/nm/20080420/bs_nm/autoshow_dc_2
Sorry, couldn't resist.