SHANGHAI MOTOR SHOW:With cut-throat profit margins in markets closer to home and billions in potential sales out east, this week western car manufacturers set their sights on all things Asian, writes MICHAEL McALEERin Shanghai
THERE MAY well be nine million bicycles in Beijing, but last year more than 18 million new cars took to China’s roads as well. The Chinese are quickly becoming the car industry’s most beloved consumers.
The Asian giant is now the world’s biggest car market since it overtook the US in 2009. Last year’s new car sales were up 32 per cent and while sales have dipped this year, the market is expected to record growth figures of between 10 and 15 per cent every year for the next decade.
What really makes motor industry hearts palpitate is that ownership levels in proportion to population are a 10th of those in Europe or the US.
Hardly surprising then that the Shanghai motor show is quickly becoming one of the most important fixtures on the motoring calendar.
Since the opening up of the car market to foreign firms over the last three decades, the established global brands have arrived here in force, competing alongside dozens of local producers.
As with most things in China, governmental influence plays a big role. To enter the market foreign firms must first create a joint venture with a designated local firm.
In return for access to this lucrative market, foreign firms share knowledge on manufacturing techniques and the like with its the local partner. The local firm in turn builds its own brand of cars as well, often using the lessons learned.
The local benefit is a dramatically improved national car industry. The trade-off is worth it for the foreign brands however, for Chinese consumers still prefer to own established foreign brands, and pay a premium to do so.
The joint-venture approach is likely to serve another role in the coming years as western brands use their Chinese plants to produce cars not only for the local market, but for the rest of the world as well.
Speaking at the show, Volvo chief executive Stefan Jacoby, whose firm is now owned by the Chinese Geely Group, said that some of its future cars may well be built in Chinese plants for export. “We see it with many consumer goods today that are sold and branded by European and US firms but built in China without any problems with quality or reliability.”
As for local brands, the Chinese government is supposedly set on creating a handful of strong global firms from the current disparate local group of producers. That’s one of the reasons it has set stringent emissions requirements of 95g/km for all manufacturers by 2020.
Only the strongest firms – and those which are likely to be able to compete internationally – will be able to meet the standards, which are similar to those demanded in the EU by 2020, but with the extra headache that China doesn’t have a diesel car market. So all the savings must come in petrol technology.
Shanghai itself is awash with impressive metal. In one of the wealthiest cities in the China, Maseratis, Audi R8s and big-engined SUVs are not uncommon sights.
This week it plays host to a motor industry here in force to show its interest in all things Asian.
The show is now firmly on the motoring map, boasting a host of world launches. Audi unveiled its smart new supermini crossover Q3; VW had the new Beetle; Citroën showed off its new DS5, aimed at being a premium rival to the BMW 3 Series and the like; and there were a host of near-production design concepts heralding things to come.
Top of that list was the new Mercedes A-Class concept – production-ready according to company officials – the new BMW M5, and a look at the future design direction of Volvo.
Not to be outdone, local brands revealed their serious intent with some surprisingly sharp concepts and near-production models. Geely in particular impressed, with a range of cars that look smart enough to certainly win favour locally and perhaps compete abroad if the price were right.
With the provisio that we haven’t had a chance to drive any of them, the firm showed off a new Mini-lookalike supermini, a smart seven-seater people carrier and a small SUV that looks remarkably like a Hyundai Tucson from a few years back.
While the west wonders when the Chinese are going to arrive, indications are that they are not as fascinated with our markets as we are with theirs.
With 1.4 billion people in your market, another 1.2 billion next door in India, 91 million in the Philippines and hundreds of millions more in other neighbouring countries, worries about selling a few hundred a year in Roscommon don’t cause sleepless nights in Shanghai.
Yet the dominance of foreign brands – holding the top seven positions in terms of sales – indicates how fond Chinese customers are of established international brands.
The importance of China is evidenced by Citroën. At the launch of its new DS5, managing director Frederic Banzet told The Irish Times he expects China to be its biggest market within the next decade. Similar expectations are held at other brands. What that will mean for the focus of the motor industry and their model offerings remains to be seen.
But while the rest of the world trundles along with cut-throat margins and even more marginal growth, the lure of China will see it become the most important playing field for any car brand in the future.
New cars on show
VW Beetle
Try as they might, VW can't reawaken the passion of the original Beetle and the new car simply hasn't got the personality. Wide wheel arches and a sweeping rear tail hint at a Beetle that's been bred with an Audi TT. Due for launch this autumn it will come with a range of engines, though the most popular in Ireland will be the 1.6-litre TDI diesel or a 1.2-litre TSI Bluemotion petrol.
BMW M5 Concept
This is the finished car in all but name. Gone is the 5.0-litre V10 that is set to be replaced by an eight-cylinder aided by twin turbo chargers. Also gone is the SMG gearbox to be replaced by a seven-speed double clutch transmission with Auto Start Stop function. Under the skin, the M5 will have exclusive M suspension components that include special wheel suspension systems, specific axle kinematics, as well as upgraded brakes. Power output is expected to increase to 560bhp.
Mercedes A-Class concept
One of the stars of the show, it's the car the A-Class should have been from the start. Slightly more squat than its supposed rivals such as the VW Golf, the striking new front is really fetching and the overall styling is a match for cars like the Scirocco as well.
Volvo Concept Universe
Now owned by Chinese firm Geely, the Swedish brand – under chief executive Stefan Jacoby (pictured) – is pointing to its next generation design language with this concept car that will in fact be built. It will go into production for the Chinese market in the next two or three years and may well come to western markets as an S90, though the name has not been agreed.
Audi Q3 and A3 saloon concept
The new Q3 is a smart little supermini crossover, akin to an A1 with added height and easier access to the rear seats. Interior trim is up to the usual top-notch Audi standards and rear legroom is surprisingly good, partly because of the higher seating position. Where the A1 has failed to win over Irish buyers, the Q3 stands a great chance of success if the price is right. So too does the A3 saloon, with its smart boot tucked on. Shown as an electric e-tron concept, the car could also be a hit with Irish buyers who love their boots.
Citroën DS5
With a great deal of fanfare and promises of a new dawn for premium motoring, Citroën has unveiled its new DS5, arguably the culmination of its relaunch of the DS range and the best looking model to carry the legendary moniker to date.
Unlike the two earlier models in the DS range, this car is very different in styling and format to its mainstream cousin, the recently launched C5. It also doesn't share parts with it, built instead on an extended version of the same platform as the new C4 and with chassis parts from the C4 Picasso.
This will be the first Citroën to feature a diesel hybrid format, matching a 163bhp 2-litre diesel with a 37bhp electric motor driving the rear wheels. It's an impressive output when you consider that emissions levels for the car will be just 99g/km.
Aside from the diesel hybrid, two petrol and two diesel engines will also feature in the range. The diesels comprise the HDI engine from the hybrid putting out 160bhp and a more efficient e-HDI with 110bhp. The petrol engines will offer 155bhp and 200bhp respectively.
Inside the layout aims to be a serious rival to established German premium rivals, such as the BMW 3-Series and Audi A4. It might be regarded as a niche player given its format and its badge, but the firm believes that it's the best approach to bring a French brand back into the premium market and give it a real chance to challenge German dominance.
Top 10 selling cars of 2011 in China (sales – year to date)
1.VW Jetta (63,033)
There's a new one on sale in Europe but this is the Mark II-derived version favoured by Irish families two decades ago
2.Volkswagen Lavida (62,605)
The old Golfs still pull a crowd and this Mark IV-based version scoops second place
3.Buick Excelle (61,1950)
The first of the General Motors entrants has some commonality with previous generation Astras
4.BYD F3 (57,570)
The local firm in which Warren Buffett is a shareholder is better known in the west for its electric car crusade but this Toyota Corolla lookalike is powered by a regular 1.5-litre petrol
5.Chevrolet Cruze (56,762)
Smart-looking mid-size family car from General Motors
6.VW Bora (56,570)
Similar to the car that replaced the Jetta in Europe several years ago before being shelved for the Jetta's return
7.Hyundai Elantra (54,104)
Built locally with a partner it's slightly different from the old Elantra but not by much
8.Ford Focus (50,608)
Older version sold here but selling well so far this year
9.Honda Accord (47,096)
Built in China in joint-venture with local major player Dongfeng
10.Toyota Corolla (44,591)
