Why The World's Top Automakers Are Flocking To Beijing



Beijing's government has had to resort to a registration lottery to hold down its growth.

Skip a couple years in China, as I had, and you're not likely to recognize it when you return, especially the capital city of Beijing. Peering out from my hotel, through the ever-present smog, new high-rises have transformed the landscape and even on the Sunday afternoon I arrived I could see and hear the construction crews at work across the city.

My first trip to China came shortly after General Motors opened its first joint venture assembly plant a dozen years ago. Back then, Beijing was a city of countless hutongs, the narrow alleys and neighborhoods where most residents once lived. Today, most of those traditional communities are gone, the few remaining ones hidden behind modern skyscrapers.

Those old streets never could have handled today's traffic. Not that the grand new boulevards and highways are coping much better. You can still find the odd rickshaw in tourist neighborhoods. And motorcycles and electric scooters are everywhere. But today, the automobile is king, and traffic is so thick the local government has had to resort to a registration lottery to hold down its growth.


Paul EisensteinPaul A. Eisenstein is Publisher of TheDetroitBureau.com and a 30-year veteran of the automotive beat. His editorials bring his unique perspective and deep understanding of the auto world to Autoblog readers on a regular basis.



Beijing has become a must-see event for anyone who works the auto show circuit.

Everywhere you go in China, the story is the same. A few years back I visited Xi'an, the home of the country's first emperor who ordered the creation of more than 8,000 life-size terracotta soldiers then buried them before his tomb hoping they'd protect him in the afterlife. Large swaths of the central city were being bulldozed to make room for wider roads.

China is already the world's largest automotive market and, by various estimates, its citizens will purchase upwards of 30 million cars a year by decade's end – about 80% more than the record for the U.S. market.

When GM opened its first plant, there were hundreds of small, local manufacturers feeding an inconsequential market. The Beijing Motor Show – which alternates each year with the show in Shanghai – was equally insignificant. No longer. Today, it has become a must-see event for anyone who works the auto show circuit, rapidly gaining the stature of the industry confabs in Detroit, Geneva and Frankfurt – indeed, the alternating Beijing and Shanghai shows have all but usurped the once essential Tokyo Motor Show.

That event, last autumn, was largely forgettable. Only a handful of foreign manufacturers participated and even the Japanese makers seemed to have lost interest, saving their biggest news for abroad. The critical Honda Accord Coupe Concept, for example, debuted in Detroit last January. Nissan's equally important Altima was held for New York while the maker's smaller Sentra (or at least its Sylphy doppelganger) debuted here in China this week.

China's auto market kept surging right through the huge recession that crippled the rest of the world.

In something of an irony, even Bentley used the Beijing show as a backdrop to reveal a special-edition Mulsanne honoring the Diamond Jubilee of Queen Elizabeth.

About the time GM opened its Shanghai plant, China was running desperately short on foreign currency reserves. Not anymore. The country's wealth is vast and readily apparent. A high-rise mall next to my hotel is reserved for only the top-tier global luxury brands, like Dunhill and Cartier.

A news release that just crossed my digital transom reveals that Mercedes-Benz has just opened its first store here dedicated to selling only its most exclusive AMG models. That's not a first in China. It's the first anywhere in the world. For decades, the U.S. was the globe's largest market for high-line automotive marques. It is quickly being supplanted by the Middle Kingdom.

Significantly, the Chinese auto market kept surging right through the huge recession that crippled most of the rest of the world, sales continuing to grow well into the double-digits. Yet, there are signs of a slowdown. Okay, one Europe might be happy with, sales still gaining at more than a five percent annual pace. But could it be possible that China's new motoring public is retrenching?

One troubling sign: Mercedes-Benz recently cut prices on some S-Class models by as much as 25% to retain momentum. And another new press release from J.D. Power warns that "amidst the Beijing Auto Show product celebration, the industry is experiencing declining dealer profits."

It's hard to believe that China's auto market won't hit the 30 million mark and keep on growing.

That reflects the rapid growth of competition as much as anything else. Manufacturers like Nissan, GM and Mercedes have been shifting capital resources to China at record levels. Ford, last week, announced plans to invest $760 million to double its production capacity here. The irony is that a nation that still proclaims itself "communist" now sees the most fearsome fight among capitalist carmakers anywhere in the world.

It's hard to imagine there won't be a slowdown at one point or another in the Chinese market. But it's also hard to believe that it won't hit the 30 million mark and keep on growing. Until recently, China's economic boom was almost exclusively concentrated in Beijing, Shanghai and a handful of other cities along the Pacific Coast. The central government has been pressing to spread the wealth inland – where there are somewhere on the order of 200 more cities with populations of a million or more. Like Xi'an, they are being rapidly transformed in preparation for the four-wheeled revolution to come.

No wonder the Beijing Motor Show is such a big deal.


Paul EisensteinPaul A. Eisenstein is Publisher of TheDetroitBureau.com and a 30-year veteran of the automotive beat. His editorials bring his unique perspective and deep understanding of the auto world to Autoblog readers on a regular basis.




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  • 22 Comments
      Rol
      • 2 Years Ago
      News flash. Cars are for the Chinese people, not the government. People seem to confuse the government and the people quite a bit. People dislike the government, but forget that probably 97%+ of the population are just regular people, hard working, trying to save up for something nice.
        Steve
        • 2 Years Ago
        @Rol
        I have been to China several times. Some people may say that they dislike the government but they are fearful to say anything opening about the government. True, 97 % or so are regular hard working people but only a small percentage can afford to buy a car (but a small percentage of alot is still alot). Cars are more expensive in China than what they cost in the USA. And the Chinese make alot less than what an American makes making it very difficult to buy a car. In China, gas stations are few and far between, there is very little parking in the cities for cars and where there is parking, it is very expensive for them. Many roads are not setup to handle high traffic (poorly designed). The Chinese that I know that own cars don't drive them often due to the cost of gas and it is too difficult to get around in the cities. It makes more sense for them to use their good public transportation system. Most cars that I see on the roads are taxi cabs, company cars driving clients or workers somewhere, and the rich with there luxury cars.
      canuckcharlie
      • 2 Years Ago
      Well come? for shame...
      Big Squid
      • 2 Years Ago
      China is the world's number one source of cybercrime, political repression, internet censorship, poisoned baby formula, copyright violation, industrial espionage, toys with lead paint in them, poisoned pet food, drywall with formaldehyde leaching out of it, and low-quality motorbikes. Vote me down if you're a chi-com spy!
        Famsert
        • 2 Years Ago
        @Big Squid
        The Symantec Internet Security Threat Report actually says the US is the #1 source of cybercrime lol. China is #2. Nice try though. American dry wall was found to emit toxic fumes too but the media strangely didn't pick that story up.
          hevace
          • 2 Years Ago
          @Famsert
          So I guess all that part about the political repression, internet censorship, lead poisoning, dog food, and baby formula are accurate. Big Squid also forgot that China is # 1 in pollution.
      Ocellaris
      • 2 Years Ago
      How quickly the automakers forget... http://www.autoblog.com/2012/02/28/china-issues-list-of-approved-vehicles-for-government-purchase/ But hey, keep showing off the cars in China. It should work out great until they finish stealing all of the ideas and getting people trained to build the same cars for cheaper and made by domestic Chinese automakers.
        Bern
        • 2 Years Ago
        @Ocellaris
        I don't remember seeing a foreign government car in the US. Are politicians driven in Mercedes in the US? Does the police use BMW? No, so why complain about China doing the same thing?
          SloopJohnB
          • 2 Years Ago
          @Bern
          Turns out police often use foreign vehicles. Not every police department uses Harleys, for example, even those with some Harley units use Kawasaki or BMW in other units. Personally, I prefer the BMW police bikes. Faster, better handling, lower maintenance. As for cars, time to get over it...most cars are more foreign than American...Toyota Camry is most American-content car in North America...LOL!
        Steve
        • 2 Years Ago
        @Ocellaris
        I know someone that works for Chery (Chinese car company), he is a westerner. He bought a Chery that came right off the line and he said it was a "lemon". This car had no problems, he said that was the first time he saw a Chery automobile that had no problems...... LOL
      space
      • 2 Years Ago
      I'm sorry. I think supporting china like this is like going over to the house of someone who you know abuses their kids all the time and just talking and eating with them like nothing is wrong. I love the people but I HATE the government.
        • 2 Years Ago
        @space
        [blocked]
        brian
        • 2 Years Ago
        @space
        Like our Government is so much better? The difference I see is that one was a Totalitarian regime which has gradually allowed greater personal freedoms and the creation of wealth for the masses - and the other was once a Free country which is tirelessly revoking personal liberties and sending its wealth elsewhere while concentrating it's remaining wealth to a few elite.
          • 2 Years Ago
          @brian
          [blocked]
      KAG
      • 2 Years Ago
      So is a China shows people taking pictures of the car from every angle they can so they can make there own next week? To bad America sent all its money to China and isn't a super power now.
      • 2 Years Ago
      [blocked]
      • 2 Years Ago
      [blocked]
      SloopJohnB
      • 2 Years Ago
      Quite likely the Chinese government will limit cars in Peking to owners with parking spaces, much like Japan/Tokyo. Too many rats in the cage.
        • 2 Years Ago
        @SloopJohnB
        [blocked]
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