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China caps boom year for auto market with car show

December 17, 2010

HONG KONG (AP) — China’s second major auto show for 2010 kicks off next week in the southern city of Guangzhou, capping a year of record sales for the country’s booming auto market, though analysts warn the strong growth will likely ease.

Unlike its more glitzy cousins in Beijing and Shanghai, which are held in alternating years and are aimed more at establishing China’s presence globally with product launches, the Guangzhou show has always been aimed at local buyers.

But car makers will still put on a show for the tens of thousands of potential buyers expected to pour into the eighth annual Guangzhou International Automobile Exhibition, in bustling Guangdong, one of China’s most prosperous provinces. The show, known as Auto Guangzhou, runs from Monday — its media day — through to Dec. 27.

China overtook the United States in 2009 as the world’s biggest car market, with sales surging 45 percent to 13.6 million vehicles. Monthly sales this year have seen double-digit percentage growth and analysts are forecasting that for the year as a whole, sales may climb roughly 30 percent to about 17 million vehicles.

Such explosive growth may not continue in 2011 because tax cuts and other government incentives look set to end, although analysts say sales will still expand at a brisk clip.

“The growth rate will slow down but it still will have healthy momentum. We think there will be 8 to 10 percent for growth for passenger car sales next year,” said Lin Huaibin, a Shanghai-based analyst at IHS Automotive.

For many automakers, China is their best hope as they struggle with weak sales in the U.S. and other developed markets.

Guangzhou is a major base for Japanese automakers including Toyota Motor Corp. and Honda Motor Co., which both have joint ventures with Guangzhou Automobile Industry Group.

Toyota and its upscale Lexus division will be out in force in Guangzhou with 45 models on display, three of them making their China debuts. Nissan Motor Co. promises the global launch of one model among the 18 cars it will have on show, including six from its luxury Infiniti brand.

Local car makers, which have been itching to expand overseas, will also have a presence.

Geely Holding Group, little known outside of China until it bought Sweden’s Volvo Cars from Ford Motor Co. earlier this year in a $1.5 billion deal, will have at least 13 models on display. Industry observers will be looking to see whether Geely will make any announcements on its plans for Volvo.

One of this year’s hot themes has been so called “green” cars, including hybrids and electric vehicles.

Local Chinese car makers have been racing to develop electric vehicles as they anticipate demand from the U.S. because of tighter fuel efficiency standards. The Chinese government is also pushing the development of the electric car industry at home.

General Motors Corp.’s joint venture with local partner Shanghai Automotive Industry Corp. will have 23 vehicles on show. They will include an electric battery-powered version of the Chevrolet Sail, which was developed in China specifically with the local market in mind.

GM will also display its plug-in hybrid Volt and the next generation Spark city car.

Ford, which operates two joint ventures with local partners, is also getting in on the green theme by displaying its Mondeo equipped with its fuel-efficient EcoBoost turbocharged gasoline engine, along with its Edge sport utility vehicle.

Volkswagen is set to reveal an all-electric Bora sedan, according to China auto blogs. Volvo will be bringing 15 cars, including the battery powered plug-in C30 that it unveiled earlier this year.

Electric vehicles are well suited to China, where most drivers live in crowded cities and typically make short trips. However, despite the hype, they haven’t yet taken off.

“Everybody talks about green cars but there’s no breakthrough,” said Yale Zhang, an independent auto analyst based in Shanghai.

Zhang said electric vehicles need bigger advances in battery technology and lack sufficient infrastructure such as charging stations, to support them.

Also, “gasoline prices are not high enough to support development of these new energy vehicles,” he said.

Update hourly