- Title: CHINA: Carmakers look to China amid global sales slump
- Date: 20th April 2009
- Summary: MODELS REHEARSING FOR SHANGHAI AUTO SHOW MODELS POSING BESIDE CARS OF CHINESE AUTOMAKER, BRILLIANCE GROUP MODEL POSING BESIDE CAR
- Embargoed: 5th May 2009 15:34
- Keywords:
- Location: China
- Country: China
- Topics: Industry
- Reuters ID: LVA9VUMZPC12WHRDXOOIRYZBBALF
- Aspect Ratio: 4:3
- Story Text: Amid the global economic downturn, automakers are looking to China for growth as they unveil their new cars ahead of the Shanghai Auto Show.
Carmakers are cutting any costs they can these days, but China is one place where they won't be skimping as they battle for customers in one of the world's few remaining growth markets.
Shanghai will host what has become an increasingly high-profile auto show in China from Monday (April 20), when virtually every brand will try to impress with fancy new cars and concepts while offering a glimpse into the next generation of green vehicles to showcase their technological advances.
Some automakers have already set out to charm their audiences by launching their new cars on Sunday (April 19), a day ahead of their competition.
In a glitzy ceremony on the 94th floor of China's tallest building, the Shanghai World Financial Centre, German luxury carmaker Porsche unveiled the Panamera grand tourer, its fourth model line and its most important product launch in years.
Klaus Berning, the company's executive vice president for sales and marketing said the world premiere of the Panamera was held in Shanghai to showcase the importance of the Chinese market.
"We wanted to give a sign how important the Chinese market for us, is. It is the third biggest market in the world and this is the first time that we launched a new model series outside of Europe and outside of America.
And it's just a strong statement that we believe in this market, we believe in Asia, and we just wanted to send a strong signal from Asia to the world,"
he said.
Only a few years after surpassing Japan as the world's second-biggest car market, China has overtaken the United States in sales so far this year as a deepening recession and credit crisis keep Americans from showrooms.
Chinese car sales grew 10 percent from the year before to a record in March, extending gains from the previous month fuelled by the introduction of lower taxes on cars with engines smaller than 1.6 litres.
At another launch on Sunday (April 19) afternoon, German automaker Daimler AG showcased the remodelled Mercedes-Benz S65 AMG sedan in a world premiere at the same venue, underscoring its focus on the Chinese market, where AMG sales nearly tripled last year.
Mercedes-Benz is aiming to outperform growth in China's luxury car market after scoring a 50 percent rise in sales last month.
It is set to add three more models in China this year to bring the total to seven, underscoring his bullish outlook for the market.
The company expects the Chinese economic stimulus measures to give sales of luxury cars a major boost this year, making the country an increasingly crucial market for it as demand slumps elsewhere.
"Well, I would say on one hand, all these carmakers who have and can offer cars below 1.6 litres are directly impacted by this purchase side issue. On the other hand, we are indirectly impacted because for the stimulus package, I would say, in all areas, on the construction area, the stock prices are increasing. So, and this has an indirect impact then to our customers. And therefore, they are buying our cars or premium luxury cars," said Ulrich Walker, head of the Daimler's Northeast Asia operations.
China has launched an economic stimulus package worth 4 trillion yuan (585.5 billion U.S. dollars) to help it reach its target of 8 percent economic growth this year.
Still new to the trade, Chinese automakers are also revving their engines to take an ambitious path to the premium and lucrative end of the car market as they aim to share the spoils with dominant foreign brands.
At the Shanghai auto show next week, indigenous, cut-price makers such as Chery Automobile and Geely Automobile will showcase sedans to go up against some of the best-regarded models from entrenched brands such as Volkswagen's Audi.
Most Chinese carmakers, including big, state-owned ones such as the parent of Chongqing Changan Automobile and FAW group, have so far focused on competing mainly on price with basic and often rudimentary vehicles, leaving foreign-branded cars to sweep up the mid-to-high-end segments.
But global rivals and analysts expect a rocky road to acceptance for the Chinese.
"The question is how long does it take that the Chinese brands can compete with carmakers from Europe, from Japan, from the U.S. This will take time. The big question is how long does it take. But I am sure that in the future also, the local brands are competitive enough to go abroad and to export their products in our parts of this world," added Walker.
Brilliance Auto, the parent of Brilliance China Automotive Holdings, learned that lesson the hard way when one of its sedans scored just one star on a five-star rating scale in a 2007 crash test in Germany, forcing it to make swift improvements.
Still, few are ruling out eventual success in the world's most populous market with its wide-ranging consumer base of sophisticated urbanites and newly rich middle class.
With floor space roughly the size of 30 football fields, organisers said the Auto Shanghai 2009 will house 13 world premieres -- mostly from local brands -- up from five at the show two years ago.
Shanghai and Beijing take turns hosting the main Chinese auto show every year.
The Shanghai auto show will open to the media on April 20 and to the public for a week from April 22. - Copyright Holder: REUTERS
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