- Apr 24, 2012
Beijing Motor Show is further proof of China's automotive importance
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.
Beijing's government has had to resort to a registration lottery to hold down its growth.
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.
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.
Beijing has become a must-see event for anyone who works the auto show circuit.
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.
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.
China's auto market kept surging right through the huge recession that crippled the rest of the world.
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."
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 believe that China's auto market won't hit the 30 million mark and keep on growing.
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.