Beijing Motor Show 2006

Sales of cars in China are growing at a 30% rate with 6.8 million of them in that country.  Just six or seven years ago you couldn’t find people who knew how to drive, let alone own a car in China.  It is on the verge of overtaking Japan as the second largest car market in the world.  The prediction is that by 2010 yearly car sales will top 10 million.  On top of all that the average price has dropped 40% over the past few years!  Talk about movement to a commodity. 

The top ten car makers in China by brand are Volkswagen with 17.5%, GM with 10.8%, Hyundai with 9.9%, Honda with 7.4%, Toyota with 6.3%, Chery with 5.7%, Geely with 4.8%, PSA with 4.8%,  Nissan with 4.7%, and Ford with 3.1%.  The Chinese government’s goal is to have Chinese makes take 60% of their domestic market share by 2010.

Geely Automotive wants to be in the US market by 2008.  Even if 2009 is more likely that is fast.  Just a couple of years ago this car show was dominated with Chinese cars that were virtual knockoffs of European and US designs.  Today those are in the minority and this year’s show displayed some exciting designs that showcase the artistic and inventive talents that exist in this country.  Keep your eyes on China.

Chery was a small car company selling 5,000 cars a month and now that is more like 35,000 with talks with Daimler Chrysler, Fiat and Alfa.  Car company Red Flag is partnering with Toyota. Dong Feng displayed their EQ7240BP with a bellows rear hatch that expands the storage while keeping it covered.

The next thing to keep your eye on is aftermarket equipment and the industry that will build up around it.  In the US it is under SEMA, the Specialty Equipment Manufacturers Association, where growth in aftermarket has been phenomenal.

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The growth of this industry in the US has surpassed 450% over the last five years and this trend has continued of almost two decades.  That amounts to over $29 billion in sales for the last year.  The time will come when this hits China and the growth you will see there will far surpass that experienced in the United States.  Keep your eyes on China.

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One Response to Beijing Motor Show 2006

  1. Noel says:

    I have mixed feelings about China entering the auto biz. It’s good for China domestically in some ways–better mobility for its people (at least in urban areas), but I wonder about the environmental impact in China and ultimately globally. I’ve heard they have emissions and fuel consumption rules, but don’t know the details. My understanding is that outside of the big cities the infrastructure to support a car culture is poor, so I wonder if half a billion Chinese will be sitting in gridlock much of the time. Can an infrastructure be built quickly enough to meet demand?

    I also wonder about quality and safety. China is great at manufacturing stuff engineered elsewhere–primarily electronics–but other than that, a lot of the stuff from China is of marginal or poor quality. And since the Chinese have no qualms about stealing the ideas of other, combined with a tendency to cut corners whenever and wherever possible, I wonder what is really going to be built when it comes to something as complex as an automobile. Not something I want to spend much time in, that’s for sure. I’ve seen the crash tests of some Chinese knock-off of a Japanese SUV and it folded up like a beer can under a Chevy Suburban.

    And as for Chinese cars coming to the US, the last thing we need is another car manufacturer, especially one selling cheap disposable cars. And with GM and Ford looking to get in bed with the Chinese, we have a disaster in the making, as neither company has been very successful in partnering with other companies and importing cars into the US market.

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