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Auto show woos lucrative Chinese market

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SHANGHAI, China -- Global and Chinese automakers showcased family-friendly sedans and SUVs targeting coveted urban buyers at China's biggest auto show this week as competition intensifies in this huge but crowded market.

China's vehicle sales rose 13 per cent in March, blistering growth by western standards but down from 45 per cent from 2009. With sales weak elsewhere, global companies that see China as a key part of their future are pouring money and technology into fighting for market share, squeezing each other and new but ambitious local automakers.

"It is a very, very competitive market," said Bob Socia, president of General Motors Co.'s China arm.

The Shanghai Auto Show, held in alternate years, has grown into one of the global industry's most prominent events, especially after China passed the United States in 2009 as the biggest auto market by number of vehicles sold.

Organizers say exhibitors at this year's show will display more than 800 vehicles, from mass-market compacts to minivans to hand-built sports cars with price tags of more than $1 million.

GM is displaying 53 models from its Buick, Cadillac and Chevrolet units as well as its local Baojun and Wuling brands. GM says it will launch 17 new and refreshed models in China this year and wants to expand Cadillac's share of the country's booming luxury market.

Ford Motor Co. unveiled a new version of its Mondeo sedan and the sport model of its smaller Focus ST aimed at prosperous, family-conscious Chinese buyers. Marin Burela, the president of Ford's main Chinese joint venture, said the Mondeo is aimed at luring Chinese buyers with "affordable luxury."

The Mondeo "rivals vehicles priced well beyond this segment," Burela said.

Italy's Fiat SpA, trying to catch up after launching its first China venture just three years ago, unveiled a version of its Viaggio sedan and an SUV, the Freemont, based on the Dodge Journey. Fiat said the Viaggio, with a smaller 1.4-litre engine than models sold elsewhere, was its first vehicle designed for the China market.

China's auto sales last year topped 19 million. Industry analysts and automakers say they expect rapid growth to continue, rising to annual sales of as much as 32 million vehicles by 2020 -- the equivalent of the United States and Europe combined.

"China really is in the infancy of industry development," said David Schoch, Ford's president for Asia and the Pacific. Ford expects 60 to 70 per cent of its sales growth to come from the Asia-Pacific region in coming years, he said, "and most of that is driven by the China engine."

Schoch said Ford plans to double the size of its China dealership network to more than 800 outlets.

Despite rapid sales growth that has left Beijing, Shanghai and other major cities choked on traffic and smog, competition has been brutal, forcing fledgling Chinese automakers to merge in hopes of competing with bigger global rivals.

Ford's local partner, Chang'an Automotive Group, swallowed rivals Changhe and Hafei and a series of smaller producers. Shanghai Automotive Industries Corp., which assembles vehicles for GM and VW, absorbed Nanjing Automotive.

Still, the market is fragmented among more than 100 brands and some domestic producers have sales of just 1,000 to 2,000 vehicles a year.

Germany's Volkswagen AG is China's biggest single auto brand with a 14 per cent market share. GM is second with seven per cent for cars, plus its truck and minivan sales. Ford, Honda Motor Co. and leading Chinese brands such as Chery Inc. and Geely Holding Group, which owns Sweden's Volvo Cars, have shares of two to four per cent.

The squeeze on independent Chinese brands has worsened as global automakers target their core low-cost market with new economy models.

Chinese automakers were stunned last year when GM unveiled a version of its Sail sedan priced at just 56,800 yuan (US$9,100). GM says it also exported more than 60,000 Chinese-manufactured Sails last year to other developing markets.

Chery's sales plunged 10 per cent last year. It responded this month by announcing an overhaul that will eliminate two of its three brands and slim down its product range from 20 models to 10 or 11.

"It's already survival of the fittest," said analyst Namrita Chow of IHS Automotive.

One Chinese brand that has bucked the trend is Great Wall Motors Co. Its profit jumped 65 per cent last year, driven by sales of its popular SUVs, which are exported to 80 countries including Australia, Italy and Russia.

Great Wall unveiled two new SUVs at the show, the H6 and the H7, as well as a sedan and a pickup. On the strength of those new products, CEO Wang Fengying said this year's sales might rise 30 per cent.

"We put a lot into research and development -- really, a lot," said Wang, the only female chief executive of a major Chinese auto brand. "We hope we know just what customers want and trust."

-- The Associated Press

Republished from the Winnipeg Free Press print edition April 22, 2013 B6

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