Shanghai Auto Show - New Mecca Of The Global Car Industry
The Shanghai Auto Show is now the biggest car exhibition in the world, surpassing Geneva, Frankfurt and Detroit. The show will premiere some 75 new car models including Volkswagen's highly anticipated new Beetle .
Some 2,000 exhibitors and suppliers are expected at this week's Shanghai Auto Show. Spread over some 230,000 square meters of exhibition space, it is now the world's largest auto event: the shows of Geneva, Frankfurt and Detroit all pale in comparison to that of Shanghai. The world's biggest car market is finally also home to the largest gathering of the automotive industry.
An indication of just how important the event has become is the fact that 75 new models will be launched on the world stage here between now and April 28, the final day of the show. On Monday, on the eve of the official April 19 opening, several companies already staged debuts. Volkswagen, for example, introduced its new Beetle.
More than 70 years after the debut of the iconic car, Volkswagen is bringing a third edition to the market. The car will be available from the fall, announced VW CEO Martin Winterkorn. No official price has been cited, but behind closed doors, a target price tag of €17,000 ($24,000) has been discussed.
Daimler presented its new A-Class, which Mercedes hopes to pit against the compact class. US auto giant General Motors, on the other hand, unveiled its first car developed solely for the Chinese market. Kevin Wale, president of GM China, presented the Baojun 630, which will cost between € 7,000-10,400 ($9,980-$14,827). Ford is also planning a number of launches this week. Other notable debuts will include Chevrolet's new Malibu and the Audi Q3. From within Chinese ranks, manufacturer SAIC is poised to introduce the Roewe SUV W5.
In the Chinese market, Volkswagen leads the way. The group increased its sales by a fifth in the first quarter of this year to almost 550,000 cars, and now has 18 percent market share. By comparison, Ford - which entered the Chinese market much later - must today be satisfied with a mere two percent market share. Through VW, Audi, Skoda, and Seat, the Volkswagen Group distributes 21 models in China.
On top of that, imports are increasing quickly. By 2013, the Volkswagen Group wants to introduce another 22 new models to the Chinese market and expand its production capacity greatly in the country. "Our factories can't keep up. Today, we're at 135 percent capacity already, despite our nine production sites," says Volkswagen China CEO Karl-Thomas Neumann.
In 2010, VW, with nearly two million cars sold, accounted for at least a third of total group sales. Despite reinvestment of initial gains, the company has contributed significantly to the group's profits. Volkswagen has, in conjunction with its partners SAIC and FAW, invested about ten billion euros ($14 billion) in China since 1984. It has sold some ten million cars, and hopes to expand its commitment to some 10.6 billion euros ($14.8 billion) by 2015. "We can pay off of the cash flow," says Neumann. "We will be able to sell three million cars here in 2015. I'm willing to bet on it.
At the Shanghai show, Volkswagen and GM are the market leaders. Together with their partners, "Shanghai SAIC" and "Changchuns FAW" they occupy two of the 13 exhibition halls.
In total, the show has 20 percent more exhibitors than it did in 2009. Despite the recent earthquake, all the Japanese manufacturers are present. "Anything with rank and reputation in the industry is represented here," says the German organizer of the show, Hans-Joerg Geduhn.
The other German manufacturers and suppliers that maintain 190 car plants, production and assembly sites in China today are also heavily represented at the show. According to the German Association of the Automotive Industry (VDA), Volkswagen, BMW and Mercedes are poised to grow faster than China's overall market in the first quarter. In the luxury sector, the German manufacturers dominate three quarters of the market.
However, for the Chinese manufacturers themselves, the situation is quite different. They seem to be the biggest losers in their own market. Many small manufacturers of cheap Chinese brands are currently struggling with large sales declines. The Shenzhen-based company BYD dropped 41 percent in sales in March. The company began to slash prices in February – possibly the first sign of a future price war.
In contrast with its foreign competitors, China's car market is fragmented into hundreds of unprofitable auto producers. This is also reflected in the chaos of new model development. In 2011, 72 new models will be introduced to the Chinese market - 50 of these will come from local producers.
Apart from the new models on display, the major theme of the exhibition in Shanghai is the growing field of electrical mobility. Everyone is waiting to hear the Beijing State Council decision regarding a new 10-year plan. China hopes to be the world market leader for hybrid and electric cars by 2020. The first step would be to set up production facilities for one-million energy saving cars by 2015. Beijing would support this development with the equivalent of eleven billion Euros ($15.6 billion).
Volkswagen, in a race with the Daimler Group, has adapted a three-phase strategy by which it hopes to be the Chinese market leader in electric vehicles by 2018. With its two joint ventures in Shanghai and Changchun, VW wants to build two types of electric cars that could be ready for series production as soon as 2013. "We're keeping a few options open," says VW CEO Neumann, in order to be ready when China takes off with its electric market. In Shanghai, VW will also introduce its first electric scooter. The market for battery-powered bicycles and scooters in China has "grown phenomenally," in recent years, says Neumann.
Amidst all of the hype in Shanghai, however, critics in China are raising their voices. "Do we really need the biggest automotive exhibition in the world?" ask commentators in the Beijing newspaper XinJingBao. Shanghai is bigger than Detroit, Paris, Frankfurt and ten times as large as Tokyo or Geneva. "But the real innovations in the automotive technology, the trends, the fashions - they're all coming from these other cities." Even in the automotive industry, they argue, China is a victim of the maxim of growth at any price.
Read the original article in German.
Photo - Marc van der Chijs