The Global Perspective
should come as no surprise that the big automotive story globally is
China. Analysts have been predicting and preparing for the rise of the
Chinese auto industry for years, and the boom is occurring just as
expected, according to Garel Rhys, director of the Centre for
Automotive Industry Research at the Cardiff University Business School
in Wales. "It seems to be accelerating because the Chinese are
beginning to believe the people who are saying they are the next big
thing," he says. "It's certainly a continuation of the trends of the
last five years, when we've seen a lot of activity occurring in China."
the statistics: China vaulted past Japan last year to become the
world's number-two vehicle market (the United States is number-one).
Car purchases in China were up 37 percent, according to the China
Association of Automobile Manufacturers, and sales of all vehicles
including trucks and buses were up 25 percent. Some 7.2 million
vehicles were sold in China last year, compared with 5.7 million
tallied in Japan by the Japan Automobile Manufacturers Association.
thought the market in China would take a year off growth, but it didn't
happen. It was another record year," says Rhys. And that has translated
into major activity on the plant construction and expansion front. "In
China, you probably have more than half of the world's activity in
terms of expanding and building facilities," he says.
Chinese boom is robust economic growth, estimated at 10.5 percent for
2006. The growth has translated into great sales figures for Chinese
automakers and foreign manufacturers alike. General Motors, for
example, saw China sales rise 32 percent to nearly 880,000 vehicles and
recently announced plans to build hybrids in China. Ford's China sales
of all brands rose 87 percent to about 167,000 units. BMW's sales were
up by more than 50 percent. In fact, high-end cars are selling so well
that Rolls-Royce has had to hire more workers to meet the Chinese
demand for its Phantom, which retails at more than $300,000. Shanghai
General Motors Corp., a GM joint venture, is China's top-selling
automaker, while the biggest Chinese manufacturer is Chery Automobile
The next chapter of the China story involves exports.
Chinese automakers exported some 325,000 vehicles in 2006, mostly
trucks and buses destined for Asia, Africa and Latin America. But they
have their sights set on Western markets. Changfeng Motor Co. brought
SUVs and pickups to the Detroit Auto Show this year, signaling its
intention to crack the American market in the not-too-distant future.
DaimlerChrysler may team up with Chery to make small cars for sale in
the United States and elsewhere within a couple of years. And ZX Auto
has plans to enter the U.S. market by the middle of next year, which
could make it the first Chinese car seller in the States.
Automobile Co. also hopes to break into the American market next year.
It had a presence at last year's Detroit Auto Show, and is gearing up
production dramatically. "Geely wants to build 650,000 cars by 2013,"
says Rhys. "That really is a representation of what the other companies
are doing. They are all expanding, and also expanding in the heavy
truck and diesel engine areas."
Growth in India may be a bit
overshadowed by the Chinese boom, but Rhys says India is full of
opportunities: "More people are aware of the growth in India now."
recent headlines, Honda is making plans for its second Indian plant, a
$200 million small-car plant in the western state of Rajasthan. Initial
production would be about 50,000 units. Honda already is selling small
sedans in India. Also, Volkswagen recently announced plans for a plant
in Maharashtra state that by 2009 will build 110,000 cars annually.
are lured by promises of healthy economic growth in India. Some 1.1
million passenger cars were made there in 2005, and analysts expect
that figure to reach 2 million by 2010.
Even with growing local
demand, some Indian manufacturers have their eye on the global pie. For
example, a small manufacturer named Mahindra & Mahindra is making
plans to enter the American market, perhaps as soon as the fall of
2008. Word is that an SUV and a pickup would be the first products to
hit the U.S. market.
Rhys sees activity and promise in Russia,
where he says "the next 10 years in Russia are going to be very
interesting, indeed, in automotive developments." Also, keep an eye on
the Ukraine and other former Soviet bloc and Eastern European
destinations. For example, Poland, the Czech Republic, and Slovakia
have enjoyed positive automotive and component manufacturing headlines
in recent years. One current report has Ford shifting production of its
leading small-car brand, the Ka, from Spain to a production line in
Mexico continues to attract attention from
automakers. Reports from the Mexican Automotive Industry Association
indicate that at least three new plants could be established there in
the next few years. General Motors, Volkswagen, and DaimlerChrysler are
among those said to be looking, and the total investment estimates of
$7.5 billion would match the investments made by automakers in the past