Hot auto market creates native competition for Detroit

(AP)
Updated: 2007-04-24 10:38

Shanghai, China With models like the Hover and Roewe, Chinese-brand cars aren't household names in the United States and other big markets - not yet, at least.

Related readings:
Record numbers crowd into city auto show
Chinese automakers showcase eco-cars

Automakers go green in Shanghai show

Ambitious road ahead of country's car industry

But Chinese upstart auto makers with equally obscure names such as Chery, Geely and SAIC are challenging industry leaders such as General Motors, Volkswagen and Toyota in the fast-growing China market. They're making inroads throughout the developing world with an eye toward eventually entering big Western markets such as the United States.

China's homegrown auto makers vie for attention with global giants such as GM at this week's Shanghai Auto Show, a biennial event that will showcase China's phenomenal rise to become the world's No. 2 vehicle market.

The tenfold jump in China passenger car sales in the past decade has proved a big boost to General Motors Corp., which has become the market leader in China even as it loses market share at home. GM's sales in China last year rose 32 percent to 876,747 vehicles, and Ford Motor Co.'s jumped 87 percent to 166,722 units.

"Detroit is so cold, but here it's so, so hot," says Yale Zhang, a Shanghai-based auto analyst with CSM Worldwide.

Demand from newly affluent drivers in China lifted passenger car sales by 37 percent last year to 3.8 million units. China's vehicle market, including trucks and buses, grew to 7.2 million last year, putting it second behind the United States with 16.5 million autos sold but ahead of Japan, with 5.7 million.

Last year's top-selling model was the Jetta, made by FAW-Volkswagen, one of Volkswagen AG's joint ventures. Even Toyota, a relative latecomer to China, is gaining ground, with a 66 percent jump in first-quarter sales.

China has required foreign auto makers to partner with local companies, and the boom has fattened profits for nearly all, Zhang said: "They have money and they have room to maneuver. It's easier now."

Domestic manufacturers are also getting a lift. Sales of small cars have surged after the government phased out urban restrictions last year on sales and use of minicars such as Chery's popular QQ and rival Changan Automobile Group's CV6, a similarly egg-shaped minicar with a 1.3 liter engine.
12  

(For more biz stories, please visit Industry Updates)