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China takes centre stage

Nation's auto shows vital as sales shift east

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Buick Riviera concept car

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Buick Riviera concept car

Every spring, China puts on its annual new-car show, flipping biennially between the major cities of Beijing and the host of this year's event, Shanghai.

Canadians can't buy any of the new vehicles on display from the more than 100 home-market Chinese brands, so why do auto journalists travel halfway around the planet to cover China's auto shows?

For starters, China has become the largest new-vehicle market in the world, surpassing the U.S. in 2009. In 2012, 15.5 million new passenger vehicles were sold in China, about one million more than the U.S. While double-digit growth has cooled a bit, some project China's new-vehicle sales could grow to 20 million annually by the end of the decade, so this year's Shanghai show reflected this growth.

Spread across 17 huge show halls, more than 2,000 exhibitors displayed about 1,300 vehicles in late April at the Shanghai venue, while Western automakers from Acura to Volvo -- which have been riding the growth of their Chinese sales to prop up flagging numbers in North America and Europe -- are here in full force.

Take Germany's Audi, for instance.

In 2012, Audi set an all-time sales record with more than 1.45 million new vehicles sold globally. With more than 400,000 of those sales coming from China -- another record -- the Asian country has become Audi's biggest market, supplanting Germany, its former No. 1 market, two years ago, and allowing the Volkswagen Group luxury brand to surpass rivals BMW and Mercedes-Benz.

"With this record, we have increased our lead over the competition, further strengthening our No. 1 position in the premium segment in China," the Audi board member responsible for sales and marketing, Luca de Moe, said at the show during the world premi®re of the company's all-new A3 sedan.

Further emphasizing how important China is to Audi, before the new compact A3 Sedan goes on sale about a year from now in Canada as a 2015 model, China's burgeoning middle class will get first crack at the small Audi by the end of this year. That's when the A3 goes into production in a new factory in southern China, Audi's second manufacturing facility in the country.

"The new plant has a capacity of more than 150,000 automobiles per year," said Rupert Staler, chairman of Audi's board of management, providing another reason for Audi to be optimistic it will set more sales records in 2013, its 25th year selling cars in China.

But it's just not luxury Western brands that are reaping the benefits of voracious Chinese new car-buyers.

Trying to play catch-up to General Motors and the Volkswagen Group -- the No. 1 and 2 top-selling Western automakers in the Asian country -- Ford is heavily betting on China. As part of a US$4.9-billion investment, Ford will launch 15 new models and open four new plants in China by 2015, including its biggest-ever manufacturing facility in the southwestern city of Chongqing. The American automaker also plans to double its Chinese production capacity and expects one-third of its global sales to come from Asia by 2020.

But as much as Western automakers chase Asian customers, they've also started designing vehicles for the Chinese market, with some of these vehicles ending up in Canadian showrooms.

With China as Buick's biggest market in the world, it's no surprise to see the new Riviera Concept make its debut in Shanghai. Like the Canadian-market Verano and Lacrosse sedans, the Riviera was designed with Asian buyers in mind, but will influence future Buick models sold back in North America.

One similarity between this year's Shanghai auto show and any other major shows around the world is the plethora of gas-electric hybrids and pure-electric production and concept car debuts. You only have to spend a few days in China to see that the air quality will only get worse if the number of fossil-fuel-powered new vehicles continue to grow at projected rates.

However, like Western buyers, Chinese customers haven't bought into the value proposition of the electrified car just yet. In 2012, Japan's Honda launched three hybrid vehicles in China -- the Honda Insight, CR-Z and Fit Hybrid. But of the more than 600,000 vehicles Honda sold here last year, only a little more than 500 were hybrids.

"Overall, we have high hopes for hybrid technology. In terms of how important it is to the Chinese market, we are slowly releasing products and looking at how they do," Honda CEO Takanobu Ito said during the auto show's media day.

Like Western new-car buyers, Honda is discovering that individual practicality -- i.e. the size of the customer's wallet -- wins out over the collective good of trying to burn less fossil fuel.

"We think there are still more Chinese consumers who want to simply buy a car that fits their needs rather than buy a hybrid," Ito said. "I mean a good-quality car with an affordable price that doesn't break down. At present, this takes higher priority."

Understandably, all four of Honda's new concept and production vehicles unveiled by the Japanese automaker at this year's China auto show were powered by traditional gas-only power plants.

-- Postmedia News

Republished from the Winnipeg Free Press print edition May 10, 2013 E4

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