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2008-04-17 10:16

Joe McDonald

On display at next week's Beijing Motor Show: Global carmakers' hopes that booming China will drive sales this year as demand elsewhere slumps.

General Motors plans to show 42 models at the six-day Motor China 2008, while Volkswagen is debuting two cars designed with domestic partners for the China market. More than 100 others ranging from luxury carmakers Mercedes and Bentley to ambitious Chinese upstarts are showing off compacts, sedans and SUVs.

"The interest is unprecedented for carmakers. It's become one of the industry's main events," said Tim Dunne, director of Asia-Pacific market intelligence for J.D Power and Associates.

The reason is simple: Sales in China - already the world's No. 2 market after the United States - are forecast to rise by 15% this year, in contrast to flat or falling sales in the United States, Europe and Japan.

"Both for volume car makers and luxury car makers, they all are looking at China as their main growth engine," said John Zeng, China vehicle industry analyst for the consulting firm Global Insight.

Chinese carmakers, little known abroad, hope to use the show, which opens to the press on Sunday and to the public on Thursday, to build global brands even as they face growing competition at home from bigger, richer foreign rivals.

China's Chery says it will display 26 of its own vehicles in Beijing, ranging from subcompacts to an SUV. Chery has a deal with Chrysler to produce a low-cost car for the US market but the release has been pushed back as the partners reportedly work on improving the vehicle's quality.

Another Chinese competitor, Geely, says it will show 23 models and a concept, or display, car.

China overtook Japan as the world's second-biggest vehicle market in 2006.

Last year, Chinese drivers bought 5.5 million cars, minivans and SUVs and 3 million commercial vehicles. That was up from a total of just 1.6 million vehicles sold in 1997. J.D Power says sales should grow by 1 million vehicles annually through 2015.

Demand is driven by economic growth that has topped 10% for the past five years and reached 10.6% for the first three months of this year.

"Other developing markets might have fast growth but not the volume and consistency of China's growth," Dunne said. "The biggest growth potential is in China."

The officially endorsed car culture has transformed China.

A country that had almost no private cars 15 years ago is crisscrossed by new highways. Ancient city centers have been bulldozed to make way for car-friendly avenues. Cities are surrounded by American-style shopping centers with sprawling parking lots.

But the car culture has left major cities choked by smog and rush-hour traffic jams. It has boosted dependence on imported oil, which worried communist leaders see as a strategic weakness.

Carmakers are so eager for a share of China's market that they are willing to bear the high cost of two Chinese motor shows - one in Beijing annually and a second every other year in Shanghai.

Most shows are so expensive they usually are held once every two to three years. In Europe, the Paris and Frankfurt shows are held in alternate years. Tokyo's auto show takes place every other year.


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