Automakers Head for Shanghai Auto Show, Hoping for Rebound in Sagging Sales Growth

SHANGHAI, China April 15, 2005; Elaine Kurtenbach writing for the AP reported that top world automakers will showcase new models in China's commercial center of Shanghai next week in hopes of reviving languishing domestic sales.

General Motors, Ford and other major industry players will be showing dozens of vehicles at trade show Auto Shanghai 2005, part of Shanghai's push to establish itself as hub for the world auto industry.

New models on display will include concept cars such as GM's hydrogen fuel cell powered Sequel, unveiled earlier this year. Visitors will also get a chance to see luxury sports models from Jaguar, Lamborghini and Porsche, according to show organizers.

China's auto market has grown at a torrid pace in recent years as families with growing incomes shift from bicycles and scooters to their first sedans.

But sales have slowed in recent months amid intensifying competition.

Chinese automakers sold 574,300 passenger vehicles in the first quarter of this year, down 7.69 percent from the same period a year ago, according to the China Association of Automobile Manufacturers.

March saw a slight uptick, with passenger vehicle sales rising 2.48 percent in the month to 256,000, but demand has clearly plateaued. Vehicle sales are forecast to rise about 10 percent this year, compared with 75 percent growth in passenger car sales in 2003 and 15 percent last year.

Meanwhile, Chinese passenger car makers saw their profits plunge by 78.4 percent in the first two months of 2005, amid falling sticker prices and rising costs for raw materials, especially steel. Car prices dropped an average of about 12 percent last year, according to state media reports.

Still, major world automakers like General Motors Corp., Volkswagen AG and Toyota Motor Corp. have announced plans for billions of dollars (euros) in new investments as they ramp up capacity in anticipation of future growth in this nation of 1.3 billion people.

Shanghai is home to two of the country's biggest automakers, a joint venture between state-owned Shanghai Automotive Industry Corp. and GM and a separate venture between SAIC and Volkswagen.

Volkswagen's Santana model, staple of the city's taxi fleet, once commanded the market, but GM has swiftly gained market share with its popular Buick sedans.

SAIC's ventures face stiff competition from other up-and-coming auto joint ventures.

Beijing Hyundai Motor Co., a joint venture between Beijing Automotive Industry Holding Co. and South Korea's largest car maker, Hyundai Motor Co., dominated in the first three months of 2005 with sales of 56,100 passenger vehicles.

Guangzhou Honda Automobile Co, the Japanese automaker's factory in the southern city of Guangzhou, was the second best seller, with 45,000 in sales in the first quarter.

Shanghai General Motors Co. was close behind, with 44,500, but that was a 35 percent drop from the same period in 2004.

Staged this year for the 11th time, the Shanghai auto show opens April 22 in Shanghai's Pudong financial district. The show will feature 1,036 automakers and parts suppliers in a 120,000 square meter (1.3 million square foot) exhibition center.

Organizers said they expect 300,000 visitors during the weeklong show, which is held every two years.