Car-makers' juggernaut in China

Brand awareness: visitors look at some of the 1,125 vehicles on display at the Beijing International Automotive Exhibition on Monday. Andy Wong / AP Photo

The air around Beijing might be a thick, polluted smog but the message coming from the world's car manufacturers at the Beijing international motor show, this week was perfectly clear - this country is where it's at.

For the past three years, China has been the world's number one new car market and last year sales totalled 18.5 million vehicles.

"It's like an unstoppable train, not that we want to stop it," one Jaguar insider said.

To provide some perspective and illustrate just how rapid this growth is, consider that, in 2009, Jaguar sold 400 of its luxury saloon XJ models to Chinese buyers.

Last year, the company sold more than 4,000. But then, statistics such as these are being bandied around by seemingly every manufacturer at the show.

"The products that we are building today globally have a lot more attention paid to what the customer needs in China," Kevin Wale, the president of General Motors' China operation, told Associated Press.

Aiming to attract the expected one million visitors who will walk the sweaty exhibition halls, these companies have a staggering 1,125 vehicles on display in an area of 230,000 square metres. At Beijing's first motor show in 1990, just 216 cars and motorcycles were on show.

Of course, it is not just cars that China's big spenders are dropping huge sums of money on. The wave of consumer spending is showing no sign of crashing into the shore, as luxury hotel chains and clothing boutiques familiar to anyone in the UAE struggle to keep supply up with demand.

Little wonder, then, that the world's car companies deem it worthwhile coping with the obstructive bureaucracy that goes hand-in-hand with any country with a communist ruling party. The cash registers are loudly ringing and hands are being rubbed together in eager anticipation of another bumper sales year.

One surprising exception, however, is Bugatti. The Volkswagen-owned manufacturer, as is the norm, declined to talk specific numbers but those in the know say just one of its 407kph Veyron supercars was sold here last year. That did not stop Julius Kruta, the company's ever-genial head of tradition, putting on a positive spin when talking to us.

"The Veyron appeals to younger buyers," he said, "yet the big spenders in China tend to be those who want ultimate luxury, who want to be chauffeured in complete comfort. So this car is not exactly a perfect fit for the market but we're working on building our brand awareness ahead of the launch of the Galibier [Bugatti's upcoming four-door saloon model], which we're expecting to perform much better in China."

While many of the cars have previously been seen at shows around the world, no fewer than 120 models were making their global debut in China. More than 80 of those were being shown by China's domestic manufacturers - companies such as Dongfeng, Geely, Chery, Haima and Brilliance Auto.

The cars are often bizarrely designed and poorly constructed, meaning they do not find markets outside China, but their popularity in their own territory is impossible to deny as they take more than 40 per cent of the market share.

The 36 models premiered at Beijing by overseas manufacturers were the undoubted stars of the show, however, which will continue until May 2. Volkswagen now has eight separate brands under its banner, making it sensible to book an entire 9,600 square metre hall for the various stands required to showcase the goodies.

The German car manufacturer took the wraps off the new E-Bugster electric concept car and Bugatti showed off yet another new Veyron variant, the Grand Sport Vitesse, as well as a one-off Wei Long 2012 edition replete with porcelain dragon motifs inside and out. But it is unlikely the company will be doing significant numbers until that all-new saloon car is unwrapped in a few years' time.

But the model that stole the show was unquestionably the concept 4x4 unveiled here by Lamborghini. As a proposed third model line, it's an indicator of how market forces dictate modern car design. Purists, though, will be appalled that a supercar manufacturer would sell its soul by starting to build 4x4s, but then Lamborghini, part of the Volkswagen group, needs that financial buffer.

If the board green lights the project, production will not be for a further four years but the numbers, while still low - 3,000 predicted sales annually, are double the company's entire current output. Only one problem with it and that is the name. Urus, anyone?

"We decided after a deep analysis in different segments that this is the perfect fit for our brand," Stephan Winkelmann, the chief executive at Lamborghini, told Bloomberg TV.

Just five days before the opening of the motor show, China's State Council announced the adoption of a development plan for energy-saving vehicles.

The plans are ambitious: sales targets of 500,000 electric and plug-in hybrid vehicles within three years from now, and five million by 2020.

Average fuel consumption is also in the firing line, with the plan calling for a reduction from 6.9 litres per 100km to five litres by 2015. With China being the dominant market for almost every manufacturer, it is easy to see why they are all in such a rush to make vehicles greener.

They have to help save the planet in order to help themselves survive. There is no way they will miss out on future bonanza sales years, so cars that pollute and consume less will become more sophisticated and luxurious to keep those yuan notes rolling in.

With a population 10 times that of Dubai, Beijing is a firmly established cornerstone for car sales, yet China as a whole is home to more than 1.3 billion people. The car companies here displaying their wares are busy fixing their sights on hugely populated cities most people have never heard of, with Volkswagen openly announcing that, after having made huge inroads in the north, south and east of the country, it was now time to "go west".

The China success story looks set to continue for many years to come.