International luxury car brands on show in Beijing

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Global carmakers gathered in Beijing to show off their wares as competition intensifies and growth slows in the world’s biggest auto market.

International luxury car brands on show in Beijing

Global carmakers see rising competition in ChinaBeijing (China) – 25 April 2016 – AFP Global carmakers gathered in Beijing on Monday to show off their wares as competition intensifies and growth slows in the world’s biggest auto market, with SUVs and new energy vehicles the focus of attention.The show, which alternates between the capital and commercial hub Shanghai, came after auto sales in China grew just 4.7 percent last year, down from 6.9 percent in 2014, according to data from industry group the China Association of Automobile Manufacturers (CAAM).Sales still totalled 24.6 million in 2015, making it a crucial market for foreign manufacturers as well as domestic brands.”It is slowing down,” Ford China chairman and CEO John Lawler told reporters. “The market is really acting more and more like a mature market rather than an emerging market.”It is part of a more competitive environment.”More than 70 exhibits by automakers from around the world stretched across the vast exhibition centre, with crowds gawking at displays of concept cars from Chevrolet and Faraday Future and lining up to slide behind the wheel of a Tesla.Perhaps the most attention-grabbing exhibit was homegrown startup Qiantu, which plans to launch its K50 — a carbon fibre and aluminium-bodied luxury electric sports car — next year.Models in short flight attendant-style skirts — but not bikinis which are banned this year — stood with frozen smiles as passers-by took photos with their phones.German manufacturer Audi has an enviable brand position in China and has long been seen by consumers as a marque to aspire to, but it too is feeling the pressure.”For sure, our competitors are trying to grab market shares from us and some are successful,” said Joachim Wedler, president of Audi China. “This is business, we have to struggle and fight.”Pricing was “getting tougher, this is obvious”, he said.Competition has become particularly intense in mid-priced vehicles, while the premium and low-cost segments have seen growth, said Hakan Samuelsson, president of Volvo. “It’s the ones in between which are the most severely hit, because the Chinese cars are getting better, with very low pricing, and then people have an appetite for premium all the way up” including his own brand, he said.The middle of the market he added, was “probably the position you would like not to be in”.Innovative growth areas such as autonomous cars and electric vehicles will also find that “competition is going to be very tough”, said Carlos Ghosn, CEO of Renault-Nissan, adding that smart vehicles also face “a lot of problems with cybersecurity that we need to solve” before coming to market.- Hybrid vigour -China’s GDP growth slowed to 6.9 percent last year, its lowest for a quarter of a century.But sales of sports utility vehicles (SUVs) and electric and hybrid cars have boomed, far outperforming other types of autos.SUV sales surged 52.4 percent in 2015, with Chinese-brand SUVs — most of them much cheaper than foreign models — leaping 82.8 percent year-on-year, giving them the majority of the sector, CAAM figures showed.Shipments of electric and plug-in hybrid cars — grouped together as “new energy” — more than quadrupled, but Ghosn said much of the rise was due to extensive government subsidies for producers and consumers. SUV sales were a “market-driven trend”, he said, while electric vehicles were “supported by the government” and consumers were “not ready” for them.”Without a doubt the development of EVs is going to be driven by regulation.” – ‘Think of the possibilities’ -Despite the pressures and slowing growth, many executives expressed optimism.Car ownership penetration remains below 30 percent of households in the world’s most populous country, pointed out Hiroji Onishi, Toyota China head. “Compared to home appliances and mobile phones, this is still a very low rate, so the car market is still a market for the future,” he said.The loosening of the one-child policy to allow all couples two offspring could see demand rise for larger vehicles such as minivans, he said. “We need to think of these possibilities and prepare.” Executives also point to high-end growth potential among the affluent and relatively youthful elite.Daimler board member Hubertus Troska, who is responsible for Greater China, pointed out that the average Mercedes customer in the country was aged just 37.”Premium customers in China are the youngest in the world,” he said. “They’re Internet-savvy, we really want to be at the forefront of connectivity and telematics in this country.”END

Tags : beijing, show, Brands, luxury, international

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