Automakers see rising competition in China

Global carmakers gathered in Beijing penultimate Monday to show off their wares as competition intensifies and growth slows in the world’s biggest auto market, with the key Sport Utility Vehicle (SUV) and new energy vehicle sectors the focus of attention.

The flamboyant 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, data from industry group China Association of Automobile Manufacturers (CAAM) showed.

Total sales reached 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.

More than 70 exhibits by automakers from around the world stretched across the vast exhibition centre with crowds gazing at displays of concept cars from Chevrolet and Faraday Future and lining up to slip behind the wheel of a Tesla.

Perhaps the most attention-grabbing exhibit was home-grown start-up Qiantu, which plans to launch its K50 concept vehicle which is 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 as a marque to aspire to by consumers, 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.”

Last year, China’s GDP growth slowed to 6.9% last year, its lowest for a quarter of a century, and worries over its outlook have roiled stock markets worldwide.

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% in 2015 while shipments of electric and hybrid cars — grouped together as “new energy” more than quadrupled, CAAM figures showed.

Sales of Chinese brand SUVs most of them much cheaper than foreign models rose 82.8% year-on-year, giving them the majority of the market in the sector. Car ownership penetration remains below 30% of households in the world’s most populous country.

 “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. “We can say that China is still in the midst of motorisation.”

Meanwhile, the loosening of the one-child policy to allow all couples two offspring could see demand rise for larger vehicles such as minivans. Executives also point to high-end growth potential among the affluent, 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, even as premium customers in China are the youngest in the world.