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Showtime in Shanghai as automakers race for China edge

2017-04-19 13:10

WORLD'S LARGEST CAR MARKET: CEO of Jaguar Land Rover, Ralf Speth, speaks during the first day of the 17th Shanghai motor show on April 19. Image: AFP / Johannes Eisele

Shanghai - Global automakers unveiled new SUVs, electric vehicles, and futuristic concept cars at the Shanghai motor show on Wednesday, racing for an edge in the world's biggest auto market as growth slows after years of frenzied sales.

China's automotive market remains the most important in the world for manufacturers, with sales jumping 14.9 percent to 24.38-million passenger cars last year, well beyond the 17.55 million bought by US drivers.

Autonomous driving is the future

With China's fast-expanding middle class adopting modern, mobile lifestyles, passenger-car sales have nearly quintupled over the past decade.

But volume last year was skewed upward by a short-term purchase incentive and has generally slowed of late as China's decades-long economic boom loses pace.

Volkswagen plans all-electric car for China

A number of automakers have already reported falling China sales so far this year. Analysts warn full-year volume could be flat and possibly contract in 2018 for the first time in memory.

Major carmakers remain bullish at the Shanghai show, China's biggest automotive showcase.

But they acknowledge they will have to innovate to keep on track as consumer tastes evolve in an ever-changing market.

"We believe the future of driving will be autonomous driving and that is true for China as well," said Daimler's China CEO Hubertus Troska, adding the firm would push to bring the next-generation functions to the Asian giant.

He said Mercedes sales grew 37% in this year's first quarter.

"I don't think we will be at the same level at the end of the year but it is still going to be a very good year," he said.

Electric avenue

As that moderates, manufacturers are focusing on still fast-growing segments like sport-utility vehicles, which are expected to overtake China sedan sales possibly this year.

Ford has even announced plans to try to sell its American-icon pickup trucks in China.

Electric cars have also seen hot growth, fuelled by green incentives from the government, which is mulling new quotas requiring carmakers to produce certain amounts of "new energy" vehicles.

China car dilemma: Beijing wants electric, buyers want SUVs

Volkswagen, China's overall market leader, will introduce a range of new SUV models in China this year and ramp up production of electric vehicles, said its China CEO Jochem Heizmann.

"It's developing even quicker than we estimated," he said of SUV sales.

"I am very confident. We are still investing in China, a level of about $4.3 million this year along with our JVs (joint ventures)."

Huge car market

The Chinese car market soared past the United States eight years ago to become the planet's top market and in 2016 set a 26th straight annual sales record.

Sales were boosted last year by the government's temporary halving of a 10% purchase tax on small-engine cars in late 2015.

Consultancy IHS Markit warned last week that slower sales had triggered a "rampant price war" in China that could pinch automakers' global profits.

Analysts say going forward the maturing of the market will benefit larger manufacturers with the scale and product range to pivot along with consumer tastes, and that a shakeout of less-able players is likely in coming years. 

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