International automakers are converging on China’s commercial capital for a show that, once marginal, is now a key showcase — and battleground — for the world’s only major growing car market.
The biannual Shanghai Auto Show, which opens today to media and on Wednesday to the public, is expected to feature an unprecedented number of new vehicle launches, reflecting the growing importance of this market for automakers everywhere.
It follows on the heels of yesterday’s Formula One Grand Prix — another Shanghai event symbolizing the city’s obsession with cars.
PHOTO: AP
“The number of new launches, especially from global manufacturers, will set it apart,” says Paul Gao (高旭), CFO of Chery Quantum Auto Co (奇瑞量子汽車), a new unit of Chery Automobile Co that is developing upscale models for the domestic automaker.
“Many automakers now see the Chinese market as at the forefront,” he said.
China, the world’s second-biggest car market, has revived sales after a slump late last year with tax cuts and rebates that are pulling small vehicles out of showrooms nearly as fast as companies can make them.
Sales hit monthly record of 1.11 million vehicles in March, exceeding US sales for the third month in a row and up 5 percent from a year earlier.
While the surge to the forefront is mainly a result of deteriorating conditions in the US and elsewhere, the gravitational center of the world auto market clearly has shifted to China and other emerging markets.
The uptick in sales this year caught many automakers off guard, since they had cut production in expectations that the slowdown in sales seen last year would persist in China, Gao said.
“There are supply shortages and in some cases, automakers couldn’t meet demand. Joint ventures rely on imported components, and many of the tier-one global suppliers were already on the verge of bankruptcy,” he said.
But these are the kind of headaches automakers pray for at a time when sales in the US market have been plunging by close to 40 percent in annual terms.
China is a lifeline for ailing General Motors Corp, which sold 137,004 vehicles in China last month, up 24.6 percent from a year earlier. Tax cuts and other government policies focused on encouraging sales of small, fuel-efficient cares pushed sales at its minivehicle joint venture, SAIC-GM-Wuling, up 38 percent to 90,784 vehicles.
Kevin Wale, president and managing director of the GM China Group, says GM intends to double its sales in China, to more than 2 million a year, by 2014. Among its strategies: launching or upgrading more than 30 models over those five years.
It’s a far cry from decades past, when vehicles like the VW Santana, a 1980s model made by Volkswagen AG’s joint venture with Shanghai Automotive Industry Corp (上海汽車) that remains the staple of Shanghai’s taxi fleets, were among the few choices on the market.
To compete now, both Chinese and foreign automakers need a full portfolio covering the whole spectrum, from the inexpensive compacts favored by first-time car buyers to the high-margin luxury models needed to compete with foreign-brand sedans.
And vehicles need to be tailored to the preferences of increasingly particular Chinese customers, says Thomas Schiller, managing director of Arthur D. Little China, who specializes in the auto industry.
“It doesn’t work to take some car and just localize it. Chinese customers are now more educated and US designs are shifting to a more Japanese and European model,” he said.
Chinese automakers, still unable to successfully challenge their foreign rivals in affluent Western and Japanese markets, are striving to bring quality up to snuff, while also going after the small-car market where their home player status gives them cost and distribution advantages.
Among those who have made headway: privately owned Geely Automobile Holdings. Based near Shanghai, it has worked hard to upgrade its sedans after floundering in European markets, several analysts said.
Meanwhile, global automakers are struggling to get their products right and to set up strong dealer networks — a major challenge given China’s vast territory and disparate regional markets.
“There is huge potential for first-time car buyers. They will buy a car because they need a car,” Schiller said.
Even now, first-time buyers account for nearly three quarter of sales. But reaching all the hundreds of millions of potential car owners in this market of 1.3 billion people requires new strategies since most of them live outside the traditional auto market centers of Shanghai, Beijing and Guangzhou.
“The biggest challenge for most players is how to enter the tier-three and -four cities,” Schiller said. “It’s a battlefield in the market and it will decide the next two to three years of growth in China.”
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
FUTURE PLANS: Although the electric vehicle market is getting more competitive, Hon Hai would stick to its goal of seizing a 5 percent share globally, Young Liu said Hon Hai Precision Industry Co (鴻海精密), a major iPhone assembler and supplier of artificial intelligence (AI) servers powered by Nvidia Corp’s chips, yesterday said it has introduced a rotating chief executive structure as part of the company’s efforts to cultivate future leaders and to enhance corporate governance. The 50-year-old contract electronics maker reported sizable revenue of NT$6.16 trillion (US$189.67 billion) last year. Hon Hai, also known as Foxconn Technology Group (富士康科技集團), has been under the control of one man almost since its inception. A rotating CEO system is a rarity among Taiwanese businesses. Hon Hai has given leaders of the company’s six