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Move over Ox - this is the Year of the Car

By Patrick Whiteley (China Daily)
Updated: 2009-04-20 14:17

The Year of the Ox is time for prosperity through hard work, especially in this harsh economic downturn. [China Daily]

Under the traditional Chinese calendar, we are living in the Year of the Ox, but in the pages of Chinese automobile history, 2009 will be remembered as the Year of Car. Moo-ve over Mr Cow.

This year China is gearing up to overtake the United States as the world's biggest car market, a trend industry experts have been predicting, but they envisioned it would be years from now.

The baton change began in January and continued through to March when China beat the US for a third consecutive month. China sales in February were up nearly 25 percent from a year earlier, boosted by the government's stimulus program, which has already triggered record levels of lending and money supply.

According to the central bank, loans in March jumped more than six-fold from a year earlier to 1.89 trillion yuan ($277 billion) and M2, the broadest measure of money supply, grew 25.5 percent.

These extraordinary statistics reflect all-important confidence in the Chinese economy.

Bloomberg reported that the growth in money supply was the fastest since it began compiling data in 1998 and exceeded the 21.5 percent median estimate in a survey of 12 economists.

The good news for China automakers is a sizable chunk of this money is being spent of motor vehicles.

Government departments, which delayed restocking their fleets after last year's earthquake, are buying cars, to the benefit of Audi, Volkswagen and Shanghai GM, maker of the popular Buick.

Beginning last month, the government offered 5 billion yuan ($731 million) in subsidies for farmers to buy minivans and small trucks. The program slices 10 percent off the price of these small vehicles, and gives the largest group of the Chinese population a taste of motoring life.

Millions of Chinese families are driving for the very first time.

You may not see that humble little minivan, the Wuling Sunshine, winning attention from motoring journalists. But this year about 600,000 brand new Wuling Sunshines will be parked outside family homes, taking pride of place. Last year the figure was about 460,000.

SAIC-GM-Wuling Automobile sold 90,950 vehicles in March, up 38 percent from a year earlier. In the first three months, the venture achieved sales of 246,293 units, up 34.5 percent year on year. Sales of its flagship minivan Wuling Sunshine reached 147,674 units in the first quarter

While China was up, US sales were down, down, down. New vehicle volumes in February declined 37 percent year on year to the lowest monthly tally in 27 years. Sales by General Motors were down 48.9 percent compared with the same month last year, while Ford fell 41.6 percent and Chrysler hit a rock bottom - a 54.8 percent decline in car purchases.

US sales of Barack Obama's beloved Chrysler's 300C (he now drives a Ford hybrid) were down more than 70 percent in January. The US President picked the right time to remodel his image, change his bets and swap his horsepower.

The US will most likely sell 9 million vehicles this year, about one million fewer than China, which has its foot firmly planted on the gas.

But at the same time, China's car industry is becoming more efficient thanks to a series of planned mergers, which will promote a few of the bigger carmakers to become the dominant players.

The State Council said last month it wants to cut the number of major domestic carmakers, which are responsible for 90 percent of domestic sales and output, from 14 to 10. This would happen by 2011.

Three mega-companies would then make more than two million units a year, while four or five others would have annual output capacity of one million units, according to the plan.

The car giants leading the charge include FAW, Dongfeng Motor Corp, SAIC (Shanghai Automotive Industry Corp) and Chang'an Auto.

SAIC, China's largest automobile maker, already began the merger trend in late 2007 when it hopped into bed with rival Nanjing Auto, which owns the MG car brand.

All of these companies, as well as dozens more, are strutting their stuff at this week's Shanghai Motor Show, which is also bucking a worldwide trend.

The marketing people really need car shows to pump up excitement for their models and this buzz attracts more people to showrooms.

In fact, car show veterans say more than half of auto-show attendees will buy a car in the coming year.

Look at the eager crowds at the Shanghai Auto Show and you won't find more car-buying passion anywhere else in the world.

The Chinese car buyer doesn't just want a car. He needs a car. The potential buyer has saved for the past few years, and has a sizeable deposit ready to slap down his dream wheels.

Auto shows around the world are scaling back their plans and some have decided to shutter shop completely.

This month, organizers of the British International Motor Show cancelled the 2010 event because the economic crisis has made it impossible for exhibitors to commit to showing up. The prestigious show is held every two years and is one of the main car industry events in Europe. Australia's annual motor show will now operate every second year.

Earlier this month at the New York Motor Show, there were 35 new models on debut, about five fewer than last year and the typical bells-and-whistle displays of the big companies were also toned down. General Motors normally mounts its shiny new Cadillacs on thick, raised glass flooring but this year opted for budget aluminum frames.

Shanghai's motor show is a different story. Thirteen new cars will be unveiled, five more than last year. About 1,500 enterprises from 25 nations and regions will show up - 200 more than last year - and exhibition areas actually expanded.

Volkswagen plans to outdo other exhibitors by setting up a 3,000 sq m display area, the largest at this year's show.

VW has come along way since it released the humble Santana, the most successful car in Chinese history, now in its 26th year of production.

Mercedes-Benz and BMW are also each boasting more than 2,500 sq m of display area.

The Shanghai show's theme is the Art of Innovation, which is where China's automobile makers are headed - and electric is the buzzword.

In late January, the government launched a program to subsidize hybrid, fuel cell and electric vehicles. At the Chery Automobile company sparks are already flying.

Chery moved quickly in February to roll out its first pure electric car, which came off the assembly line in its Wuhu plant. A full charge takes about four hours and that will power it for 150 km. This little beauty can also hit speeds of 120 km per hour.

In recent months, we have been watching the US motoring industry meltdown and seeing the ripple affect spread around the world.

The industry has hit one the biggest speed humps in 133 years of automobile history. Never since Karl Benz christened his Motorwagen (motor car) in 1886 has there been so much drama.

But in this time of great change, we are also seeing a changing of the guard, driven by the demand of the Chinese motorist.

In 2009, the motor vehicle has raced past the oxcart.

(For more biz stories, please visit Industries)

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