Slower, but still top gear

By GONG ZHENGZHENG (China Daily) Updated: 2015-04-20 13:44

Audi is shifting its top priority in China from sales volume to delivering higher quality and more environmentally friendly products, according to Stadler.

Jochem Heizmann, president and CEO of Volkswagen Group China, predicted in February that China's passenger vehicle market would grow by 5 to 8 percent this year, down from 13 percent last year.

Last month, the Chinese government cut its 2015 economic growth target to 7 percent from 7.5 percent last year.

The economy grew by 7 percent in the first quarter of this year from a year ago. This is the lowest growth rate in the past six years.

Continuous expansion

Yet despite the slowing market, carmakers seem to have no hesitation in further expanding in China, which has been the biggest single market for almost all of them.

The most aggressive move comes from Volkswagen, which revealed a plan in February to invest 22 billion euros ($23.22 billion) in China from 2015 to 2019 on new production capacity, products and research and development. Volkswagen, the biggest passenger car provider in China, plans to grow its annual production capacity in the country to 5 million units in 2019, up from 3.1 million units in 2013.

The company, together with its affiliate brands, such as Audi and Skoda, plans to introduce more than 30 new models in China this year, both imported and domestically produced.

The group's China sales grew by 12.4 percent to 3.68 million vehicles last year, accounting for 37 percent of its global deliveries.

US automaker General Motors last year announced it plan to invest $14 billion in China from 2014 to 2018 to build five new plants and introduce 60 new models, including nine SUVs.

It also plans to boost its annual production capacity in China to 5 million units in the period.

Toyota Motor, the world's top carmaker which is being closely chased by Volkswagen, reportedly plans to build two new plants in China with a combined production capacity of more than 200,000 cars a year.

The Japanese carmaker suspended its new plant plan in China in 2012 due to sluggish sales in this market.

South Korea's Hyundai Motor last month started building a new 300,000-unit plant in Cangzhou in the north of China, which will be operational in 2016. It is also planning another 300,000-unit factory in Chongqing in the southwest.

"Although the pace is slowing, the absolute growth volume in China's auto market will still be considerable compared with other major markets. And it is a very critical battlefield for all carmakers," said Xu Changming from the State Information Center.

"Therefore, all carmakers will continue to explore the Chinese market with new investment. Of course, some of them will be a little prudent due to the market deceleration."

BMW's Reithofer said that slower economic growth will affect the auto industry in China and the company will continue to consider this in its strategic planning.

But the company said it will further its localization in China by producing six BMW models "specially" for the Chinese market in the coming years. It now has three locally made models in China, including the 5 Series, 3 Series and X1.