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Transportation equipment industry

China Remains a Magnet for Auto Giants Despite Challenges

Strategic Insights

— 2 min read

Beijing remains a highly sought-after destination for global auto majors, with foreign manufacturers vying for a share of China's massive and growing car market. The 11th Shanghai International Auto Show, which concluded recently, saw a record exhibit area of over 120,000 square meters, with all major players reiterating their commitment to expanding their presence in the country. Despite slowing car sales and concerns over production capacity, these multinationals are determined to tap into China's dynamic auto market.

Key Takeaways:

  • General Motors (GM) has announced plans to maintain its investment pace in China, despite a sharp deceleration in sales. The company aims to double its annual production capacity to 1.3 million units by 2007, with a further investment of over $3 billion.
  • Ford Motor Co. is recording better results in China than ever before, with combined sales of its seven brands (Ford, Lincoln, Mazda, Volvo, Land Rover, Jaguar, and Aston Martin) surging 70% year-on-year to 170,000 vehicles in 2004.
  • Ford has clinched a deal with Mazda and Chang'an Motor to build a 350,000-unit engine plant in Nanjing, in addition to its existing joint venture with Chang'an in Southwest China's Chongqing Municipality.
  • Nissan Motor recognizes China as an important contributor to its growth during its three-year Value-Up plan, expecting China sales to exceed 500,000 units by the end of the plan.
  • Toyota Motor plans to start producing the Reiz sedan at its joint venture in North China's Tianjin Municipality this autumn.
  • DaimlerChrysler plans to invest $1.56 billion over the next three to five years in China to expand its businesses, with its joint venture in Beijing to start producing Mercedes-Benz E and C-Class sedans in the second half of this year.
  • Despite profit slumps and losses globally, foreign automakers remain optimistic about China's auto market, which is expected to see steady growth of 8-10% annually.

Statistics:

  • General Motors' sales in China grew to 132,000 vehicles in the first quarter of 2005, up 27% from 2003.
  • Ford's combined sales of its seven brands in China surged 70% year-on-year to 170,000 vehicles in 2004.
  • Nissan aims to sell 40,000 units of its 1.6-litre Tiida compact car in China this year, with a retail price ranging from 119,800 yuan (US$14,500) to 159,800 yuan (US$19,300).
  • Toyota launched the Crown sedan at its joint venture in North China's Tianjin Municipality last month.
  • DaimlerChrysler plans to invest $1.56 billion over the next three to five years in China to expand its businesses.

Sources:

  • China Daily
  • XIC 27-04 1410

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